Advertisement
Banking & finance
BusinessBanking & Finance

Hedge fund group files complaint against LME over March nickel trading chaos

  • Managed Funds Association claims LME failed to properly carry out its regulatory obligations by cancelling nickel trades in early March
  • Trading suspension was only the second time the 145-year-old bourse cancelled trading in one of its metals in its history

Reading Time:3 minutes
Why you can trust SCMP
Traders work on the floor of the London Metal Exchange. Photo: Reuters
Chad Brayin London

An influential trade body representing some of the world’s biggest hedge funds has filed a formal complaint with the London Metal Exchange (LME) over its handling of a chaotic period that saw trading in nickel suspended in early March.

Advertisement
The Managed Funds Association (MFA), in a letter, claims the LME failed to properly carry out its regulatory obligations when it halted nickel trading and cancelled thousands of trades made during the early hours of March 8 as the metal price surged.

It was only the second time in the 145-year-old bourse’s history that it had cancelled trading in one of its metals and came as soaring prices threatened to destabilise the market amid a short squeeze that triggered billions of dollars in margin calls.

“The LME has undermined confidence in its ability to oversee markets by failing to perform its regulatory obligations to maintain an orderly market, manage conflicts of interest, and protect investors in the nickel market,” Jennifer Han, the MFA’s chief counsel, said.

Traders operate in the open outcry ring at the London Metal Exchange. Photo: AFP
Traders operate in the open outcry ring at the London Metal Exchange. Photo: AFP
The complaint comes just days after the bourse, which is owned by Hong Kong Exchanges and Clearing (HKEX), was sued by two affiliates of American hedge fund Elliott Management and quantitative investing firm Jane Street Global trading.
Advertisement
Advertisement