HKEX-owned London Metal Exchange should tighten rules to prevent further market distortions: Oliver Wyman review

An independent review has recommended the London Metal Exchange (LME) tighten its rules to improve its ability to identify and prevent future market distortions similar to those that triggered a chaotic period in the nickel market last year and prompted lawsuits from investors.

The Hong Kong Exchanges and Clearing (HKEX)-owned bourse said it was “committed to taking all the necessary steps” to rebuild public confidence in its metals market, and would unveil an implementation plan in response to recommendations by consultant Oliver Wyman by the end of the first quarter.

The LME, which is facing a separate review by British financial regulators in the matter, appointed Oliver Wyman in June to conduct an independent review into the events that forced the bourse to halt trading in nickel and cancel thousands of trades in the early hours of March 8 as soaring prices threatened to destabilise the market.

It was only the second time in the 146-year-old bourse’s history that it had cancelled trades in one of its metals. Nickel trading was halted for more than a week and had a chaotic restart.