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

GLOSSARY

GLOSSARY

Term	Description
Ask Side	A reference to sell orders on the market. Also referred to as the Offer Side.
Best Bid	The highest price offered by a market participant to buy a bond or future at a given time.
Best Offer	The lowest price offered by a market participant to sell a bond or future at a given time. Also referred to as the Best Ask.
Bid	A buy order entered on the exchange.
Bid-Offer Spread	The difference between the Best Bid and the Best Offer. Also referred to as the Bid-Ask Spread.
Bid Side	A reference to buy orders on the market.
Block Trade	A type of trade defined by EUREX as involving (insofar as concerns BTP Futures) an order size of 250 lots or more. Orders of this size could (although this was not mandatory) be traded directly between parties outside of the EUREX Exchange. If that occurred, the fact that a block trade had occurred was reported on the exchange’s trade feed at specified reporting times after completion.
BTP (or Cash BTP)	Buoni del Tesoro Poliennali, the relevant type of Italian Government Bond.
BTP Future	An interest-rate futures contract based, in this case, on a notional BTP with a remaining term of between 8.5 and 11 years and a 6% coupon. There are other types of BTP future based on different notional maturity dates.
Core EGBs	EGBs issued by governments considered low risk of default, in particular Germany, France, the Netherlands, Belgium and Finland.
Coupon	The periodic interest payments due on a bond, expressed as a percentage of its face value.
Depth	Depth relates to the amount of liquidity available. The deeper a market, the more liquidity is available at various price points.
EGB	European Government Bond.
EUREX Exchange	The Frankfurt-based derivatives exchange on which the Applicants dealt in BTP Futures.
Future	A form of derivative contract based on an underlying financial asset, in this case, BTPs. The contract involves an agreement to buy or sell the underlying asset at a future date for a fixed price.
Hedging	A risk management strategy employed to offset losses in investments by taking an opposite position in a related asset.
High Frequency Traders or HFTs	Traders using algorithms, seeking to profit from high volume, low margin trading, often trading in small or very small amounts.
Hit	Selling at a bid price.
Iceberg Order	An order where only part of the total number of lots making up the order is visible to the market at any one time. Once the visible part trades another part of the “iceberged” amount becomes visible. This occurs until the order trades in full.
Lift	Buying at an offer price.
Liquidity	Liquidity refers to the ease of buying and selling in volume. The more liquid the market, the more activity there will be from buyers and sellers at the relevant price point.
Lot	One futures contract in relation to €100,000 notional of underlying BTP Bonds.
Notional	The amount to be repaid by the issuer upon maturity of the bond (ie the face or par value).
Mandate	The mandate of the EGB Desk.
Maturity Date	The date on which the principal sum of a bond has to be repaid.
Offer	Sell orders entered on the exchange.
Offer Side	Another term to describe the Ask Side.
Primary Dealer	Generally large banks, Primary Dealers are the original purchasers of Government Bonds, including BTPs, which are then made available on the secondary market. Primary Dealers usually have the largest balance sheets and inventory of bonds and have the greatest access to liquidity, market intelligence and fees deriving from the syndicated issue of bonds.
PV01	The change in the price value of a bond based on a one basis point change in yield. The longer the maturity of a bond, the more sensitive its price will be to changes in yield. This is also described as “Delta” or “DV01”.
RFQ	“Request for Quote”: An inquiry from a client, either electronically or via call to the sales team, for the price at which a Market Maker is prepared to buy or sell a particular product.
Spread or the “Bid-Ask Spread” or “Bid-Offer Spread”	The difference between the Best Bid and the Best Offer.
Tick	A one point variation in the price of a future. This is the minimum price variation permitted by EUREX. The price moves up and down in “ticks”. Each tick represents a value of €10 per lot.
Touch	A term used to describe the Best Bid or Best Offer.
Volatility	The volatility of a market refers to the historical or expected variability in price of a market or security over a defined period of time. Generally, the less deep and liquid a market is, the more volatile it is.
Volcker Rule	A US banking rule prohibiting proprietary trading by banks.
Yield	The return on a bond, calculated by reference to its coupon and current market price. Price and yield move inversely to one another (ie the higher the yield of a bond, the lower its price, and vice versa).