CYK successfully obtains summary judgment for an international brokerage firm in c.$9m index swaps dispute

21 March 2022: The Commercial Court (Richard Salter QC, sitting as a Deputy Judge of the High Court) has handed down summary judgment in IS Prime Limited v TF Global Markets UK Ltd & Ors [2022] EWHC 605 (Comm), a dispute between international online broker, ThinkMarkets, and liquidity provider, IS Prime, relating to alleged breaches of an exclusivity agreement (the “Liquidity Addendum”) negotiated between the parties as part of a wider corporate transaction. The Defendants (represented by CYK) were granted summary judgment in respect of IS Prime’s claim alleging breach of the qualified exclusivity terms in the Liquidity Addendum, relating to the trading of index swaps between December 2017 and January 2020.

IS Prime alleges that ThinkMarkets breached the exclusivity terms in the Liquidity Addendum between January 2017 and January 2020 by trading with other providers in respect of spot FX, FX derivatives (CFDs) and index swaps. The index swaps claim represents, by value, the majority of the quantum claimed by IS Prime: at least $13m of a claim totalling approximately $15m.

The defences advanced by ThinkMarkets include a claim to set aside the Liquidity Addendum on the grounds of fraudulent misrepresentation, and a claim that IS Prime acted in breach of contract by taking risk and making profit through the application of spread mark-ups, where IS Prime had promised and agreed to provide a matched principal broker service.

The summary judgment application related to IS Prime’s claim for alleged breach of the Liquidity Addendum relating to index swaps, in the period from 18 December 2017 onwards on the basis that, by an email and documents sent on 8 December 2017, IS Prime stated that it was transferring its index swap business to a Hong Kong affiliate with effect from 18 December 2017. ThinkMarkets asserted that, by this communication, IS Prime ceased to trade index swaps, discharging it from any ongoing exclusivity obligation in relation that class of product.

In granting summary judgment to ThinkMarkets, the Deputy Judge accepted the argument that, under clause 2.3 of the Liquidity Addendum, Think “may trade all transactions that are a class of Available Product with third parties if IS Prime states that it does not trade that class of Available Product” and that the necessary statement was to be found in the Client Communication Letter attached to the 8 December 2017 email. This said in unequivocal terms that “as of Monday 18 December 2017, all index swap transactions will be entered with IS Prime Hong Kong Limited instead of IS Prime Limited in London”.

The Deputy Judge concluded that this statement was “not conditional upon any action by [the Defendants]” and that it is “simply a statement of what is going to happen”. As such, he held that “a reasonable commercial party in the position of [the Defendants] would have interpreted that as a statement that, from 18 December 2017, IS Prime would not itself trade that class of product” and that “any other interpretation would, in my view, fly in the face of commercial common sense”.  Accordingly, summary judgment was granted in favour of ThinkMarkets on IS Prime’s claim for index swap related losses from 18 December 2017 onwards, which equated to circa $9m of IS Prime’s overall alleged losses.

The judgment can be found here.

Stephen Elam, Kajal Patel and Eleni Papageorgiadou act for the successful Defendants, having instructed Farhaz Khan and Kate Holderness of 3 Verulam Buildings.