UT/2024/000002 - [2025] UKUT 00188 (TCC)

CBNA and SPLC are part of the JP Morgan global corporate group, the parent company of which is JP Morgan Chase & Co (“JPMC”) headquartered in the US. CBNA is the main infrastructure providing entity within the JP Morgan Group providing services to other group entities, including SPLC, enabling them to trade in a globally consistent manner ([17]). SPLC is the client-facing entity for markets transactions in the UK. It is the contractual counterparty in client transactions and employs front office staff (traders and sales people).

JPMC’s global business comprises a hierarchy comprising (from the highest level to the lowest): Divisions, Lines of Business, Business Segments and Business Areas. Relevant to this appeal is the Wholesale division. Sitting within that division is the Corporate and Investment Bank Line of Business, and within that the Markets segment (this is a single global business carried on by different legal entities and different locations). The Markets segment is in turn subdivided into seven business areas reflecting the types of transactions undertaken namely: 1) Equities, 2) Rates and Rates Exotics, 3) Currencies and Emerging Markets, 4) Fixed Income Financing, 5) Commodities, 6) Credit Trading and Syndicate, 7) the Securitized Products Group.

CBNA’s primary case, as mentioned, is that it provides multiple services consisting of distinct Business Delivery Services to the above seven different business areas (as distinct from Support Services which we come on to describe). The FTT adopted the terms that CBNA used, namely, ‘Business Delivery Services’ and ‘Support Services’ for ease.

The Business Delivery Services were provided by four teams: Quantitative Risk (“QR”) (the development and oversight of complex statistical models used in pricing, valuation and transaction execution), Technology (provision of systems needed by the front office and used by Operations to enable transactions to take place and fulfil commitments under trades), Operations (all operational processes involved in processing transactions including clearing and settlement of trades) and Market Risk (identification, monitoring and control of risk of financial loss from market variables on trades between clients and SPLC).

The FTT went on to cover findings on: the inter-relatedness of the functions ([36]) and bespoke nature of what each business area required, for example depending on the different products traded (which meant it was not possible to use the same models operational processes and technology) ([38]- [51]), the specialised personnel required for each area ([52- 56) and the differences between the areas in terms of bespoke Commissioning and Governance ([57] – [65]).

CBNA also provided Support Services. As well as corporate functions this included functions such as HR, payroll, and tax. There were also control functions such as the Model Risk Governance Group and the Valuation Control Group. These provided governance and oversight but were not directly involved in effecting any trade. It also included services by teams responsible for maintaining financial records, compliance and external reporting.

The Support Services were delivered by different teams within CBNA reflecting divisions within JP Morgan for instance between HR, Operations and Technology. The FTT also explained how there were differences between Support Services and Business Delivery Services in terms of how these were delivered and procured ([82] – [85])).