Non compete clause for prop shops
Does anybody know cases of prop shops enforcing/not enforcing non-compete clause if somebody goes work for their competitor?
For color its a mid-big size prop shop (mentioned a lot in the forum) and they pay my salary during my non-compete clause.
Any reply or PM would be appreciated!
def enforceable (except maybe in cali.. google). I dont think many people try to challenge them. Most shop dont mind if you have a non compete esp. if you are a more senior trader. Hence why so many traders have "sabbaticals" on their resume. The real question is how long is it?
Thanks for the info. Does that mean they would be less likely to enforce if I am a more junior level?
A lot of non competes cannot be held up in court.
There's something along the lines with restricting you from using your skills to earn a living.... If it gets to restrictive there are grounds for not letting it stand.
Consult a lawyer but keep in mind they are not always iron clad.
It's more dependent on the type of trading firm. An algorithmic or quant shop (i.e. Citadel, Teza, Tower) is much more likely to enforce a non-compete than a standard market maker (i.e. Spot, DRW). Of course a lot of it depends on what you were doing at said company, but in general people are a lot more wary if you had access to the code base/algorithmic development (which you almost certainly would at any quant shop) than if you just had market making experience.
Most of the regular market makers know what the others are up to, and think their strategies are better than those around them anyways. I doubt CTC would really even care if they saw Spot's backend, while Citadel would surely love to pick up an ex-HRT guy. From what I've seen, people jump around market makers with no issues, but it's working at an algo firm that will cause you to have a garden leave (they're obviously going to pay you if they won't let you work in a certain industry for X amount of time) and a more strictly enforced non-compete.
The general rule (assuming everything is done properly) is that if you (1) sign the non-compete, and (2) accept the money they pay you during the garden leave/non-compete time period, that you won't be able to work during that period. Traders are notorious for garden leave when jumping firms...it happens all the time.
Remember that they are still paying you!!! Often times, you are still classified as a member of the firm during your garden leave....you just can't goto work, and can't access the firm systems or do any business in the name of the firm...but you still get paid!!
The reason traders want to break their non-compete is because, if you are good, you can make MORE money trading, than the base salary that your old firm will pay you to stay out of the markets. However, the contract law does not get into the specifics of dollars...only "receiving compensation" which means there is little you can do.
So, go sit on a beach somewhere and start interviewing...
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