the business of defining ethics can be left to philosophers, we can agree on the more pedestrian description given by the renowned american humanist aldo leopold : “ ethical behavior is doing the right thing when no one else is watching even when doing the wrong thing is legal. ” many of you may be wondering why laws cannot be put in place to prevent unethical behaviour once and for all. wonder no more — life is more complex than rules. misconduct happens first and laws are passed later — as we have seen elsewhere, innovation generally goes ahead of regulation. there is therefore need for something else besides a set of rules to control the behaviour of people and institutions : we need to understand and pursue ethical values. a lot has been said about this in the aftermath of the global financial crisis. 1 let me touch on three areas for your reflection. https : / / blog. iese. edu / ethics / 2014 / 06 / 25 / ten - recommendations - for - the - necessary - ethical - rearmament - of - banking / first, institutions need to develop a responsible corporate culture that entrenches proper market conduct. culture that goes beyond neat slogans to actually being the guiding force that leads to ethical behaviour and ethical outcomes. you may say the right thing on your corporate culture statements and governance code of conduct declarations, but if your employees know and are told day after day that profit is the only motive, they will behave accordingly. if they notice that customer needs take second place to corporate profit, nothing stops them from treating customers in a similar fashion — badly — in pursuit of expanding the bottom line. if they see rules bent, and notice that the most ruthless are the ones who get the pat on the back, the promotion and, ultimately, the corner office, they will behave in ways that show the greatest rule breaking and ruthlessness. the banking sector ’ s role in economic development calls for a balance between pursuit of economic profit and serving the community in an environment of shared prosperity. when financial institutions start to embrace excessive risk and questionable practices, they stop performing their ethical - social function, which is necessary for society ’ s prosperity. codes of conduct by players or industry associations should include relevant aspects of ethical behaviour of all stakeholders including employees, customers, suppliers and competitors, local communities, and owners. each of these stakeholders play a role in success or failure of their institutions. second, transparency is at the centre of ethical behaviour. all relevant information must be explained even if it is more than

bearing on the performance of the new issues. lastly, propose suitable debt instruments to diversify the range of securities available to investors and to deepen the financial markets as a way of entrenching financial stability. over the last decade, the market leaders forum has successfully achieved these objectives and continues to set bolder targets for the development of our bonds market. in partnership with various players in the financial system including the nairobi securities exchange, capital markets authority, the national treasury, kba, pension funds and stock brokers, we have managed to achieve the following : • establishment of benchmark bonds portfolio : through this partnership we have managed to defragment outstanding securities issues by creating liquidity around the selected benchmark tenors leading to development of a firm and reliable yield bis central bankers ’ speeches curve. benchmark bonds are currently available in maturities of 2, 5, 10, 15, 20, 25 and 30 years. • the pension sector reforms implemented over the last 10 years have supported the absorption of these bonds. • the kenyan capital market has gained from the benchmark bonds program in the following ways : – promoted price discovery for issuers of government securities as well as corporate instruments and investors. – reduced bond market fragmentation problem ( in terms of bond types, tenors, small volumes ) – stimulated robust secondary trading of bonds through increased liquidity around benchmark tenors. – provided reliable investment choices to investors. – lengthened the yield curve as benchmark for pricing other financial products. – facilitated development of other financial market facilities including infrastructure bonds which have been tapped to finance mortgage facilities and long term development projects. b. refinancing risk in domestic debt managed – the average maturity profile of government domestic debt rose from 8 months in 2001 to 7 years in august 2014. the ratio of t - bills to t - bonds evolved from a ratio of 4 : 1 in 2001 to 1 : 3 in august 2014. with a functioning secondary bond market in place, the government doesn ’ t face any significant rollover risks in its domestic debt. c. financing kenya ’ s development budget ; building on the success of the debut infrastructure bond issued in february 2009, the bank raised ksh. 32. 9bn in the fy 2009 / 10 and ksh. 30. 6bn in the fy 2010 / 11 through sale of infrastructure bonds to fund key infrastructure projects in the roads, energy and water sectors. d. market diversification : as a result of the success of the if