Most tech work is not particularly novel at a technical level. Very few services have any sort of massive advantage in the technical IP. Some of them might have advantage in customer/data analytics, but most advantage is in the idea itself as well as being gaining the market and brand. Another firm can't just go "Ah, today we'll knock out X new app and take 50% of the market"
This is not true in trading. If I go take my strategy/forecast and go to a competitor, I can just outright take the same opportunities that the other desk was taking (to a fairly good approximation). There's no real branding/network effect - it's a pure quality of execution business.
The compensation model in investment companies is such that they will not be able to pay employees well compared to how much value they bring in, unless you're a partner.
Furthermore the industry attracts the sort of people who are never satisfied with what they got, and are always looking for more.
Not that I'm advocating for non-competes, just saying that you can't address the concerns non-competes are attempting to address by "paying employees well".
And what benefit does the economy and society get by allowing monopolization of these strategies by a single company at the expense of basic right for workers to switch jobs to the ones that pay them the most?
It sounds so profoundly anti-capitalist - if the knowledge of certain strategy is so important, the employee should be retained by paying them more and giving them better perks instead of enforced labor contract.
I am not defending for or against not sure why you replied to me.
But I think it is slightly silly reading your statements knowing that the individuals in that hyper specific industry are top earners already and educated to know what they are signing up for.
This is exactly the right question. If quant firms make the world a better place by tightening spreads - a common justification - then wouldn't we get an even better place if everyone knew about these strategies?
A counterargument here is the effects on internal transparency. If a quant firm knows its employees can leave and join a competitor tomorrow, they will be less forthcoming with IP. The lack of openness could lead to lower productivity within the firm, as work gets duplicated and teams can't share their insights with each other.
As long as we're throwing around generalized hypotheses, a company that shared internal IP freely, and also compensated people such that they didn't leave, would gain a lasting competitive advantage.
The benefit to society is the same as patents or copyright. Companies will be more likely to invest in developing new technology if they are confident their competitors won't be able to use the result.
> if the knowledge of certain strategy is so important, the employee should be retained by paying them more and giving them better perks
This particular suggestion breaks down fast when you have multiple employees that need to collaborate. If you have a million dollar strategy, you can pay half a million to an employee as a retention bonus. But you can't pay half a million each to 8 employees.
I'd say it's the opposite, non-competes (or similar agreements) actually prevent monopolisation.
Otherwise, the biggest firms (e.g. Millenium, Citadel) could simply "buy out" any already-successful researcher, offering them more money (either in terms of % of profit, or - more importantly as it scales with size (for many strategies) - offering more capital to trade with.
Only if you have an extremely vague and poorly defined definition of "capitalist", which I don't blame you, most people are ignorant, and we live in a society that prefers to throw out opinions like they're reality.
This is not true in trading. If I go take my strategy/forecast and go to a competitor, I can just outright take the same opportunities that the other desk was taking (to a fairly good approximation). There's no real branding/network effect - it's a pure quality of execution business.