Upper Tribunal Tax and Chancery Chamber

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

Fecha: 31-Ene-2025

Conclusions on plausibility

Conclusions on plausibility

478.

On the basis of all of the evidence, the Tribunal concludes that whilst MHI had an information disadvantage, and would want to improve its position, particularly given the introduction of the 15% hit ratio, the Information Discovery Strategy would not have been a plausible response to this:

(1)

Even if a client sending an RFQ to MHI was splitting its order with other market makers, there was no reason to suppose that a single market maker would have done cash trades of the magnitude envisaged with that client based on the size shown to MHI.

(2)

Even if another market maker were, as was often described, “desperate to trade”, placing a visibly large order away from the touch and expecting the market to come to that order was illogical, as the existence of that order would have a tendency to push the market the other way.

(3)

We do not accept that MHI would obtain an information benefit from placing the Large Orders, either if those Large Orders traded or if they were cancelled.

(4)

There was no guarantee or likelihood of obtaining a profitable position if the Large Order traded. This would be a speculative position with directional risk, that was against the direction of client flow.

479.

The Tribunal has also concluded that the Information Discovery Strategy would have been outside the scope of the activities permitted by the Mandate (although individually each of the Large Orders would, if they had traded and not been hedged, have been within the Desk’s limits.)