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

Number and Size of the Small Orders

Number and Size of the Small Orders

674.

The Small Orders in the Instances are only a small proportion of the orders of fewer than 200 lots placed and executed by the Traders in the Relevant Period.

675.

Mr Kasapis suggested in his report that this demonstrated that the Small Orders in the Instance Pool were “independent” as “the larger order was clearly not necessary to cause the smaller orders to trade”. We do not accept this - the Authority has not suggested, nor do we consider it to be plausible, that every time that the Traders placed an order on the Exchange they would commit market abuse to facilitate the execution of that order.

676.

That the Traders are alleged to have committed market abuse to facilitate the execution of some of their small orders does give rise to a question as to the decision to place large orders on the opposite side of the book to these particular small orders.

677.

The Authority’s approach was to identify small orders as being those of under 200 lots, but modified this to include two orders of 200 lots or more which were iceberged to 22 and 25 (relying on the smaller size being shown to the market). However, there was a wide range in the size of the Small Orders that were within the Instance Pool, and this was reflected in the Specified Instances:

(1)

The Small Orders in the Specified Instances for Mr Urra were from eight to 90 lots, those for Mr Lopez were from one to 90 lots (with three of the ten Specified Instances involving Small Lots of five lots or fewer) and those for Mr Sheth were from five to 80 lots (where the Small Order of 80 lots was placed on the same side and at the same price as another Small Order he placed for ten lots).

(2)

In the Multi Trader Instances the Small Orders included five Small Orders of five lots each (all of which had been placed by Mr Lopez, although these were sometimes concurrent with additional Small Orders on the same side), but in F64 the Small Order (placed by Mr Lopez) was of 160 lots and in F84 the Small Orders were of 200 and 55 lots (placed by Mr Sheth and Mr Lopez respectively).

(3)

The Small Order in F132 (Mr Lopez) was an order to buy one lot. This is a Specified Instance selected by the Authority. Whilst it is an illiquid time of day (Mr Lopez placed a Large Order to sell 200 lots at 17.07.53.566), and being at the end of the day we are not persuaded that Mr Lopez could reasonably have expected that there would be imminent client buying interest of this size (which goes to the plausibility of the Anticipatory Hedging Strategy), the Small Order was placed at Best Bid. Looking at the Replay graph, including the position of the Small Order in the queue and the minimal volume showing as available at the touch on the sell-side, we consider that there must be a question as to the likelihood of the Small Order filling. However, as Mr Jaffey emphasised in his submissions, crossing the spread to get this Small Order done would have cost just €10.

(4)

Across the 40 Specified Instances, there were seven orders of 50 lots or more.

678.

Logically, it might be expected that if a Trader is to commit market abuse in relation to only some of the small orders they were placing in the Relevant Period, they would not do so when the small order was tiny but would focus instead on facilitating the execution of the “larger” small orders.