XTX’s Alex Gerko to wind up HFFX after UK tax ruling

Alex Gerko, founder of XTX Markets, is winding up HFFX, the investment partnership at the centre of a UK tax dispute. Company registry filings show the vehicle is being closed voluntarily after a Supreme Court decision.

The court ruled on the tax treatment of certain deferred compensation arrangements, issuing its final judgment about two months ago. The decision produced an assessed tax bill of roughly £22.5m for Gerko and other traders involved in the case.

Filings show HFFX stopped investing in 2015, when Gerko left London hedge fund GSA Capital Partners to found XTX. Gerko ran the partnership while at GSA from 2010 to 2015.

A representative for Gerko at XTX declined to comment on the winding up. The registry documents do not provide a timetable for completing the closure.

Gerko has argued the tax treatment amounted to double taxation on income he earned when he was relatively junior and has described the sums as modest compared with the billions of pounds in tax he has paid during his career.

The Supreme Court ruling was one of two major City tax decisions this summer. Separately, the court rejected an appeal by hedge fund manager Michael Platt and BlueCrest Capital Management over trader compensation, resulting in an assessed liability of roughly £200m.

Gerko, 46, left GSA in 2015 and built XTX into a large electronic market-maker. The firm now handles more than $250bn in trading volume each day across global markets and has paid more than $6bn in dividends to a holding company controlled by Gerko since the start of 2020.

HFFX had not been active as an investing vehicle since Gerko’s departure in 2015. The voluntary winding up recorded in company records follows the final legal determination over the tax status of the deferred compensation arrangements at issue.

Outside business, Gerko and his wife, Elena, are funding a new mathematics school in London scheduled to open this year. He has also supported education projects, the London Symphony Orchestra and a U.S. telescope initiative.