Citadel's new 21 month non-competes are not even the longest
Tales of the death of non-compete clauses at hedge funds appear to have been premature. Far from eliminating non-competes in line with government attempts at outlawing the practice, funds appear to be increasing their length instead.
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Bloomberg reports today Citadel has increased the length of the non-competes it imposes on "some" portfolio managers to 21 months in an effort to retain talent. Citadel isn't commenting on the claims, but multiple sources tell us that 21 months is nothing. The fund already imposes 24 month non-competes on its senior portfolio managers and quants. Two year non-competes are also understood to be in operation for senior people at market making firm Citadel Securities, although this has not been confirmed. Vibhav Bukkapatanam, the former Citadel Securities quant researcher who briefly joined Cubist in 2023, spent two years out of the market before joining.
Non-competes typically mandate that individuals must avoid working for rival firms. This has historically meant that engineers and quants spend time at technology firms before returning to finance when it's over. Non-competes can be lucrative: people are paid to sit out of the market, although the payment usually comes with strings attached and deferrals as well as stipulations that recipients must avoid working for competitors. California-based firm Voleon Group historically attempted to impose two year non-competes, without paying anything at all, but dropped the strategy after complaints.
Speaking two years ago, headhunter Dan Franco, said two year non-competes were already common for engineers in hedge funds. A rival hedge fund headhunter says market making firms like XTX have operated two year non-competes for a while. Qube imposes a comparatively lenient 18 months. One quant headhunter says 18-24 month non-competes are now standard for quants. Unconfirmed rumours suggest that three years are becoming the new max.
The non-compete is alive and well - unless, of course, you join Jane Street, which doesn't operate them at all and never has done.
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