Sharecast - The suit, brought by hedge fund Elliott Associates and market maker Jane Street Global Trading, challenged the LME’s cancellation of nickel trades after a short squeeze in March last year.
According to Reuters, the case centred on an unprecedented surge in nickel prices, which briefly exceeded $100,000 per metric ton during a specific period of chaotic trading.
In response to the market turmoil, the LME decided to cancel $12bn worth of trades.
Elliott and Jane Street Global sought a combined compensation of $472m, alleging that the LME had acted unlawfully and deprived them of their assets.
However, Reuters said the High Court dismissed their legal challenge in a written ruling.
The LME defended its actions by asserting that it had the authority and the responsibility to unwind the trades.
Reuters said the exchange argued that allowing the trades to stand could have resulted in a cascade of defaulting clearing members, systemic risk, and a potential “death spiral”, with margin calls totalling a record $20bn.
Reporting by Josh White for Sharecast.com.