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

Lone Large Orders placed by Mr Lopez

Lone Large Orders placed by Mr Lopez

729.

Mr Lopez placed five Lone Large Orders. He provided further evidence in relation to two of these in his witness statement.

730.

Mr Lopez placed a large order to sell 200 lots for 140.19 at 9.40.26 on 16 June 2016. That order was cancelled after 17 seconds. (Later that day he placed Large Orders in F62 and F63.) His evidence was that he had placed the Lone Large Order in anticipation of client selling, and hoped to catch a “pull back” to 140.19 (being one tick below where he considered a resistance level may be forming), and likely cancelled because he thought this pull back was not going to happen.

731.

Having looked at the Futures activity on the Desk the Tribunal accepts that there was no opposing small order in the immediate proximity of this Lone Large Order. It was truly “Lone”.

732.

On 17 June 2016 Mr Lopez placed a large order to buy 300 lots for 140.26 at 12.05.17. That order was cancelled after three seconds.

733.

Mr Lopez referred to identifying strong client buying interest – the Desk had received an RFQ from Banca d’Italia at 10.10.53 for €25m June 2026 bonds, and three further RFQs had been received from Banca d’Italia between 11.41.52 and 11.49.08 (each for different bonds, but none of which were of sufficient size to require hedging with at least 200 lots of Futures and so were not amongst the 93 RFQs).

734.

Mr Lopez explained that he had bought €10m of December 2019 bonds (in two clips of €5m each) from Credit Agricole on MTS on his own initiative, at 12.04.05 and 12.04.13. He explained that he executed these bond transactions as he wanted to make a small adjustment to the position of his book; it was an anticipatory position in that he anticipated he would be able to sell the bonds later at a better price, in line with his buying view at the time. At 12.05.10 he placed a small order to sell five lots of Futures for 140.31, iceberged to two, to partially hedge his cash trades; that order filled at 12.05.17.

735.

After placing and cancelling the Lone Large Order, he continued to buy cash bonds in shorter maturities on his own initiative, and at 12.05.29 and 12.06.29 bought a further €10m of December 2019 bonds (in two clips of €5m each) from Credit Agricole on MTS; these were anticipatory orders in anticipation of client buying. Mr Lopez said the client buying interest he anticipated did materialise – at 12.29.47 the Desk received an RFQ for a client buy order for €25m June 2021 bonds from Banca d’Italia.

736.

Mr Lopez relied on this activity to explain his approach to anticipatory hedging and his placing of large orders, including the Large Orders. The Tribunal does not consider this bears that weight:

(1)

The Lone Large Order here was placed in the same second that his small order in the opposite direction filled, and he cancelled the Lone Large Order three seconds later.

(2)

Mr Lopez cancelled this large order to buy for 140.26, yet 40 minutes later, in F74, he placed a Large Order to buy 200 lots for 140.39, then increasing the price to 140.40. That Large Order was live for 12.982 seconds and was cancelled less than two seconds after the Small Order filled.

(3)

Of the RFQs identified by Mr Lopez in support of his view of client buying interest, the largest, or rather, that which would require hedging with more than 200 lots of Futures, was that from Banca d’Italia which had been received at 10.10.53, ie much earlier that day. That was the order he was sizing for; yet he had missed this.

(4)

Mr Lopez explained that he bought the bonds at 12.04.05 and 12.04.13 on his own initiative as anticipatory positions, as with his subsequent purchases at 12.05.29 and 12.06.29. He thus had a view of the market and pricing levels, and executed trades to reflect that view; he took a position. These are smaller transactions; but they show his risk appetite and his willingness to execute a trade based on his view of the market and client buying interest.