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

Traders’ roles on the EGB Desk and interactions

Traders’ roles on the EGB Desk and interactions

221.

As Head of the Desk, Mr Urra was responsible for supervising Mr Hill, Mr Lopez, Mr Barouti and Mr Sheth. Mr Hill and Mr Barouti focused on Core and semi-Core EGBs, and did not generally deal in BTPs.

222.

The Desk was located in an open-plan working environment throughout the Relevant Period. The Traders sat next to each other, with Mr Urra in the middle. MHI moved premises during the Relevant Period, but this seating layout remained the same. In the first premises, the desk on which Mr Hill and Mr Barouti sat was diagonally behind that of the Traders; in the second location, Mr Hill and Mr Barouti sat in front and facing them (divided by the Traders’ screens and their own). In both locations, the Desk was near to desks of other MHI employees.

223.

Whilst Mr Urra had a number of roles and responsibilities within MHI, his only desk was at the EGB Desk, and he spent most of his time there.

224.

In terms of the way in which the Traders operated:

(1)

The Traders did not have real-time visibility of the orders or executed trades of the other Traders - the Desk did not have a “common blotter”. Whilst Traders could see the orders which had been placed by all market participants on Eurex, they could not see the identity of the trader that had placed the order and would not therefore know, unless specifically told by the relevant trader, that it had been placed by one of the other Traders.

(2)

The Traders each had their own “book” (with Mr Urra having two books), ie the record of the securities that they had bought and sold at any time, and the associated profit or loss. The Traders were responsible for managing their own risk on their books.

(3)

The Traders would assist each other with hedging, particularly when they were busy. Mr Lopez and Mr Sheth both agreed they would hedge Mr Urra’s trades, and this could be seen in some of the Instances.

(4)

If a Trader wanted another member of the Desk to know about a particular trade or hedge, ask them to hedge a trade for them, or give them instructions as to placing of an order (whether as to pricing or size) they would need to communicate that information orally.

(5)

There was no formal division of responsibility for dealing with RFQs of particular sizes or from particular clients. When RFQs were received by the Desk, in whatever form, the Trader proposing to provide a price in response to that RFQ would need to inform the others that they were responding. Mr Heiberg was trying to create a structure where Mr Urra and Mr Hill would focus only on the big tickets, with Mr Lopez and Mr Barouti then focusing on the medium-sized tickets (with €25m being used as an example of a medium-sized ticket for this purpose). This clear division of roles and responsibilities had not yet been introduced by the time of the Relevant Period; all three Traders were responding to RFQs of this size. The Tribunal does accept, based on the explanations given by Mr Heiberg in his interview with the Authority, that Mr Lopez had been recruited with a view to focusing on the medium-sized tickets.

(6)

The Traders could each execute cash trades which could be allocated to another Trader’s book.

225.

The Traders were talking to each other frequently throughout the trading day. The dispute of fact is the subject-matter of that discussion. Whilst we need to revert to this in the Evaluation, the Tribunal make the following preliminary findings:

(1)

The physical layout of the Desk meant that conversations between the Traders could be overheard by Mr Hill and Mr Barouti.

(2)

The Traders discussed market conditions (including market news and events) and trading strategies in general terms. Mr Hill and Mr Barouti would sometimes join in these discussions.

(3)

Mr Hill and Mr Barouti saw and heard nothing which led them to suspect that the Traders were engaged in anything untoward.