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

The Authority submitted that the size of Mr Lopez’s Large Orders was inconsistent with the size of business that he was typically doing, and that had Mr Lopez genuinely been interested in anticipatory hedging, there was no reason not to apply that strategy to (much more common and likely) smaller cash trades and “get in” at the price he considered advantageous. That was not the pattern observed: instead, Mr Lopez regarded it as 200 lots or nothing.

Mr Lopez only placed nine large orders of 250 lots or more. In all ten of the Single Trader Instances that were Specified Instances, the Large Order placed by Mr Lopez was for 200 lots (although he did place Large Orders of other sizes, including a Large Order of 400 lots in F31, which is one of the Multi Trader Instances).

Mr Lopez’s explanation was that he was trying to win more business of larger size than the cash trades he was currently winning. We accept that in such a situation it would be entirely logical that the size of the Large Orders would not be consistent with the size of the business he was currently winning – he was trying to do something different.

We consider that this submission raises again the point made by Mr Creaturo, namely the reason for the absence of a trade. We accept that all of the 93 RFQs would, if the Desk had won those RFQs, have resulted in a cash trade which would have required hedging with more than 200 lots of Futures. The list does, however, show the extent to which the approximate number of lots varied significantly. All were over 200, the range was 200 to 768 lots; and 87 of them would require 200 to 400 lots. So the use of 200 lots as a standard size was itself not precise. Given this, this raises the question as to why, if he wanted to take an anticipatory position, Mr Lopez did not try an order of a different, smaller, size, or iceberg his order (even if that did slow execution and result in less being done).