Lucrative trade in bonds sparks turf wars and staff flight

With this year’s secondary trading proving to be quite promising, major realignments in terms of staffing are expected as demand for analysts and dealers who can handle both primary and secondary bond markets rises.

The New Year’s departure of two key staff at FIB seems to have been only the beginning.

FIB chief executive, Mr Bob Karina, was virtually left without a department as he was forced to reconstitute one.

Mr Karina said the five staffers gave him a two-week notice.

“It came as a surprise. They took everybody including the clerk. I was given a two-week notice. It was sad,” he said.

Working well

He explained that he developed the team to a point where it was the envy of the rest of the brokerage community.

“I have already reconstituted the department and everything is working out well,” he said.

In an earlier interview published last November, Mr Karina said the problem in hiring bond trading staff could be resolved by training equities dealers into bonds traders and analysts.

“We have been trading in bonds for the last two years. Most securities dealers can be transformed into bond traders,” Mr Karina had said.

The situation in the hiring market for bond traders has been made acute by the fact that investment bankers and stockbrokers are also competing with treasury departments of commercial banks, which have been quite aggressive and better placed in terms of infrastructure.

Specifically, banks find it easier to carry out a trade and settle it, meaning that cash changes hands almost instantly.

This is possible because they have well established payment systems through the electronic SWIFT that is linked to the Central Bank of Kenya — which issues treasury bonds on behalf of the government.

Mr Maina had said that an experience of between two and three years in the field of bond trading and analysis was essential.

However, most experts with such credentials are already engaged by brokerage houses, investment banks and treasury departments of commercial banks which transact fixed-income securities, mainly T-bills and bonds.