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

The trading activity was as follows:

Mr Lopez’s evidence was that the Small Order to sell five lots was placed for curve management purposes and the Large Order was placed as an anticipatory hedge. In his witness statement he referred to movements earlier that day in the Bund futures market, and that the Bund/BTP Futures spread was widening which would have indicated to him market risk aversion in BTPs, and he would have expected client selling interest. But from 15.20 the Futures market started to rally, which, together with the RFQs received, would have prompted him to think it could be a good time to position himself long in anticipation of client buying. Mr Lopez referred to two RFQs received by the Desk (at 15.42 and 15.46) for client buys of €25m June 2021 BTPs, both from Banca Popolare di Milano (“Banca Popolare”). Mr Lopez’s evidence was that he cancelled the Large Order as he likely thought the pull back to 140.59 was not going to happen; and he may also have seen the Bund futures rallying and anticipated that there may not be further client buying interest.

In terms of the trading activity, the Authority relied on the length of time for which the Large Order was live, namely 3.267 seconds, and submitted that if Mr Lopez had wanted to take a directional position by buying for 140.59 he could have done so by keeping the Large Order on for five minutes.