UT (Tax & Chancery) UT-2022-000134 UT-2022-000135 UT-2022-000137 - [2025] UKUT 00214 (TCC)

The Traders referred to the spread generally being only one tick, and that therefore trading at Best Bid or Best Offer rather than crossing the spread would save only €10 per lot. The Tribunal accepts that. However, whilst that raises significant doubts as to whether the Traders would have been prepared to engage in an abusive scheme to ensure execution of a Small Order of just a few lots, this risks ignoring the need to execute hedges swiftly, and the fact that in some Instances the visible volumes were low.

By way of illustration, in F209, a Multi Trader Instance, Mr Lopez placed his Small Order to sell 35 lots iceberged to six at a price of 143.75 which improved Best Offer by one tick (this did not cross the spread as there had been a brief period where the spread was two ticks). However, it did not trade for six seconds. At the time at which the first Large Order was placed there was visible volume of 20 to 25 lots at Best Bid; the first slice of the Small Order was at the front of the queue but there were visible lots of about 30 lots behind it (so subsequent slices would be placed behind these). The stack was slim – ignoring the Large Order, at the time the first Large Order was placed the visible volume did not exceed 70 lots at any price point on either side of the order book.

The Small Orders were hedges for their cash bond transactions, or repositioning of their books. They were the trades that the Traders were actually transacting and needed to transact. We take account of the importance for the Desk of trading these Small Orders.