For many moons, bond trading was where the angels of finance feared to tread. The bond market was for the gunslingers of Wall Street, the guys with a God Complex out to prove that they were actually Gods.
Ranieri. Milken. Vranos. Cohn.
These are the names of titans. Big swinging dicks of yore who moved bonds and became very rich and very powerful in the process. They were all bond traders, and they all became legend. Bond traders didn't seek alpha, they were Alphas.
But according to some research from Greenwich Associates, times have changed for bond traders...and not for the better. After speaking to more than 30 people working on bond desks "Only 39% said they would make the same job choice, and over half responded with a definite "No.""
What the what? Are all bond traders as emo as Bill Gross now?
For those in the industry, this negative sentiment toward bond dealing isn’t that surprising. In addition to the Main Street rebellion on Wall Street since the financial crisis, the endless stream of new regulations, changing technology, restrictive internal policies, criminal prosecutions, and the risk of going to jail if there is even the perception that your actions aren’t aboveboard doesn’t exactly inspire people to jump behind the desk. Again, one of our respondents said it perfectly: “No, the overbearing regulatory environment negatively impacts our ability to service the best interest of clients.”
There's also the small matter of central banks having created an entire generation of bond traders that don't know what interest rates feel like. And where's the fun if you don't have yields hopping around like a Drexel Burnham bond trader from the mid-80's ripped on cocaine a bunny?
How bad is it, you ask? Well...
Second, most respondents who were negative about the sell-side trading role were positive about other parts of financial services. Moving from the sell side to the buy side was mentioned more than once, as there is more opportunity for growth with less stringent regulations and a debatably steadier stream of recurring revenue based on assets rather than transactions. And taking a positive view of the slew of new regulations hitting the desk, one respondent told us, “As crazy as it sounds, right now I would look into risk and/or compliance, as there is much more growth there.”
We'd have to consult the scrolls, but we're pretty certain that "Bond traders transferring to compliance" is the Sixth Seal of the Wall Street apocalypse.
Most Bond Traders Don’t Like Their Jobs [Greenwich Associates]