Non-compete agreement

Does anyone know what a non-compete agreement for a market making prop firm would typically say ?

Does it spell out which competitor firms you are not supposed to work for and how long can you not work for them ?

Thanks.

Comments (12)

Mar 30, 2010 - 4:07pm

Can someone tell me the approximate time-frame one cannot work for another firm based on the non-compete agreement ?
I am trying to get a general idea of the timeframe these prop firms enforce before you can work for another market making firm.

The firms listed that you cannot work for - are they mostly other market making firms ?

Thanks very much.

Mar 30, 2010 - 4:43pm

Usually 6-12 months
The firm can choose whether or not to enforce it.
If the firm enforces it, in a lot of cases they must pay your salary during that time
Covers "Competitors"
Also, if you leave to start your own firm, you agree not to poach others

Mar 30, 2010 - 5:36pm

Based on the posts above, would it be safe to assume that these prop firms typically look for people who are less likely to move around ?

Especially if it's true that they would have to pay the salary if they enforce the contract.

Mar 30, 2010 - 6:50pm

Noncompetes artificially makes people not want to move around. If the firm enforces the noncompete, and pays your salary, keep in mind that you still make no bonus, which for good traders is several multiples more than their base.

They're there to protect the best interest of the firm. If you just trained a kid for 6 months, and he hasn't produced a single dollar for you, of course you don't want him jumping to another firm, especially one that will hinder your ability to make money in that market. It's easily worth it for the firm to keep the kid out of action for the length of the noncompete. The 50-100k in salary that they will pay out is just a dime in the bucket

Mar 31, 2010 - 6:09pm

if you quit or fired for negligence, then the non-compete will come into affect. basically, you can't have a job in a brokerage/trading related company for a certain amount of time. most firms have a 1 year non-compete and some firms like SIG has a 3 year non-compete for new traders. these contracts are renegotiated every year and depending on your status at the firm, these can be change somewhat. for example, a trader's non-compete can only be for a certain product in a certain part of the world, etc.

usually if you get laid off, the non-compete time frame can be reduced

Apr 1, 2010 - 12:10am

Could someone clarify non compete agreement? (Originally Posted: 09/08/2016)

I have a one year non compete for a prop trading firm. I understand that this means that I can't go trade at another prop trading firm until a year is up since my employment. However, if I were to go into investment banking or sales (in the same product I currently trade now) at a bank, would that violate the terms of the non compete?

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Apr 1, 2010 - 12:12am

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