London Metal Exchange faces review over nickel trading chaos
The UK’s financial regulators will investigate the London Metal Exchange’s handling of a week-long suspension of trading in nickel amid chaotic conditions at the start of Russia’s invasion of Ukraine.
The LME suspended trading in nickel, a crucial material for electric car batteries, on 8 March after prices doubled over the course of a day to a record $100,000 (£76,200) a tonne. Trading in the metal reopened after a week, on 16 March.
The exchange’s regulators, the Financial Conduct Authority (FCA) and the Bank of England (BoE) on Monday said in a joint statement the trading stop had underlined questions previously raised about the structure of the market and “particularly the role of transparency”.
Vladimir Putin’s invasion of Ukraine had raised concerns over the supply of nickel from Russia. The Moscow-headquartered Nornickel is the world’s largest supplier of refined nickel, mined in Siberia. The company is led by Vladimir Potanin, an oligarch who is one of Russia’s richest men. He and his company have not been sanctioned by the US, EU, or UK.
Amid the market chaos resulting from the invasion, the LME caused uproar among metals traders by cancelling all transactions made on 8 March, a move it said it needed to make to protect orderly trading and prevent smaller members of the exchange from going bust.
The LME on Monday said that the movements in the run-up to its trading suspension were “unprecedented”. It has put a 15% limit on daily market moves in metals for physical delivery, which it said had broad support, and will commission its own independent review of the chaos.
It said: “The LME fully recognises the impact of these events on a broad spectrum of market participants, and understands that not all participants agreed
Read more on theguardian.com
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