Exchange licenses and transferring to diff prop shop

[Gusto&Vim]

Im currently working at a prop trading firm in the City as a trader (S&P, oil futures) , after signing a three-year binding contract. Im really unhappy with the general environment and the high turnover of traders.

Ive just been offered a similar position at a much better competitor firm just outside of London. So I need to break my existing contract. The contract states that if a trader goes to another firm during the period of the contract, the company will aim to recoup some ridiculous amount of money for breaking said contract.

Since they hold the trader exchange licenses, they supposedly can find out if youre trading at the different firm, and would not release your licenses without due payment.

Is this for real? Could they really enforce this? How does it all work? Are trader exchange licenses owned by the trader or by the backers? Not sure how it all works.

 

[N Rothschild]

would consult a lawyer who deals with employment contract if i was you!

 

[NetTecture]

Yeah, consult a lawyer.

But not sure you have even an employment contract. Do you? Are you EMPLOYED (as in: their employer, getting a wage), or are you technically a subcontractor (paying your own taxes etc.). In the later case you may need a different specialized lawyer and get a lot less protection.

Other bad news: Most likely it is legal. See, those firms have lawyers check their contracts. Depending on UK legislation... even if they can not enforce it they may be entitled to damages if you break it. Even worse news: you are an idiot for signing a contract without intention to keep it and checking the legality FIRST.

 

[Gusto&Vim]

Yeah, consult a lawyer.

But not sure you have even an employment contract. Do you? Are you EMPLOYED (as in: their employer, getting a wage), or are you technically a subcontractor (paying your own taxes etc.). In the later case you may need a different specialized lawyer and get a lot less protection.

Other bad news: Most likely it is legal. See, those firms have lawyers check their contracts. Depending on UK legislation... even if they can not enforce it they may be entitled to damages if you break it. Even worse news: you are an idiot for signing a contract without intention to keep it and checking the legality FIRST.

I joined with the best of intentions for staying the long-term (whats 3 years?), but seeing the way they operate, the way people are sacked without much explanation/warning, etc. - I just don't think Im going to survive the long-term without having a run-in regarding some issue or other. Ive had mixed signals and different opinions from people and other traders, some saying that they have no chance of chasing you up, others saying to be careful. Dunno.

 

[Gusto&Vim]

My main question is as follows: Im now a licensed trader with the various exchanges thru my current prop firm. I change company due to various reasons - let's say the legalities are in my favour. I start at the new company, and they need to vet me, the usual processes of CVs, compliance, etc. Now, will I get a new set of licenses, or will there be a request by the exchanges for my licenses to be transferred to the new company? Is it something to do with the clearers?

 

[NetTecture]

Well, technically an exchange license is controlled by exchange regulations, so - the exact details vary by exchange. No generic answer possible.

That said, a transfer will be done. Not a new license issued.

 

[crude_lover]

I have heard of this before but from what i heard they only come after you if you quit rather than being fired.
If that is the same case with you then just never show up till they fire you and then void the contract.

 

[Gusto&Vim]

I have heard of this before but from what i heard they only come after you if you quit rather than being fired.
If that is the same case with you then just never show up till they fire you and then void the contract.

By the sounds of it, this seems the best way to make a clean exit. It just goes to show how weak this type of contract is anyway - just get yourself fired, and you're free. I don't need to tell any one of you more seasoned prop traders how easy it is to get fired from many such prop shops.