Schonfeld Securities sent out a letter today warning their day traders that a bunch of them would be let go within the next 6 months.
In sum, it basically says: we’re probably going to fire you soon, but you’ll later realise that actually, we’re doing you a favour.
We think it’s worth a read through for 2 reasons:
1. The writer is trying so hard to convince these 60-odd guys to not make him feel bad for firing them
2. He repeatedly calls the to-be fired traders less-skilled and says that there is no chance they will be able to do anything more than just get by, BUT, he says, he regrets, deeply, that (despite their aforementioned great qualities) these traders will have to be let go.
What? The firm is sad to lose mediocre traders?
No, they’re not. They’re clearly just too embarassed to say, we’re a for-profit firm and we can’t afford you anymore.
Instead they say, you wouldn’t be good enough to make a proper living in the future, so we’re going to set you free to earn lots of money… somewhere else.
The letter is basically a perfect example of what’s been happening to the industry of day traders. They’re slowly and painfully being replaced by new technology.
Here is the letter, thanks to Andrew Coffey:
Schonfeld Securities Goodbye Letter:
On December 5, 1988 we started Schonfeld Securities. Very soon after, we started hiring prop traders, and many years later formed “Opus Trading Fund”.
Prop trading has always been and will always be an extremely important part of our business and certainly the one that is closest to our hearts. The best Schonfeld traders will always have a place to trade and the capital to maximise their earnings potential. We are committed to them and will always strive to provide an environment for them to succeed.
Now it gets ridiculous.
Sadly, however, we are re-thinking the notion that less skilled and less successful traders can be here forever without producing sufficiently for themselves and the firm.
For over 21 years we have always done everything we could, with the traders’ best interests in mind, to provide careers and opportunities for our traders. We have always cared more than you could imagine for your careers, happiness, well being and future. We truly admired many of your passions for trading and for the markets.
Over the years we have stood by you and you have stood by us as well. There has been real loyalty on both ends and don’t ever think we took your loyalty for granted for one second.
Bull and bear markets come and go. Good trading markets come and go. But unfortunately, our vision of the future of trading has changed.
It is getting much tougher for traders to make a living or get by. The direct competition from black boxes, stat arb and high frequency trading which continues to grow at exponential rates is here to stay and has caused us to change our outlook for lesser skilled traders.
In other words, You were lucky you used to have a job here, because you suck.
Based on the above competitive changes to the trading arena, we feel we are doing an injustice to both our lesser skilled traders and the firm by keeping them around. At best, they will barely get by and that’s not why we are in this business or what they should be here for.
Unfortunately the career of trading is not a good option for lesser skilled traders going forward. We will be letting go many of these traders over the next 6-12 months. It is with deep regret and the hardest thing we have had to do since the inception of the firm in 1988.
What the $%&# happened in the past at Schonfeld?
It truly saddens us to do this, but we are doing the traders who will not be making a living going forward a favour, so they can venture into different careers. It is even more painful since many of you have been so loyal and really good guys.
To those of you that we ultimately let go, we deeply apologise but whether you understand it immediately or not, it truly is best for you.
Yeah right. And now every trader at your firm hates you.
After discussions with the managers and exhaustive quantitative research our objective will be to reduce the number of traders we have down to those that we believe will make a great or very good living trading for years and years to come with the necessary skills needed. The traders who are newer to trading will be given some extra time to potentially have their skills stand out. The days of a trader making a living by generating $50k to $75k of adjusted gross annually are over. There is room for only highly motivated, skilled and developing traders that can add value to each other and the firm. Once again, we wish it was different and are extremely sorry for those that don’t make it.
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