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LME's nickel crisis: major developments since chaotic trading halt

Published 30/03/2023, 13:58
© Reuters. FILE PHOTO: The offices where the London Metal Exchange is headquartered are seen in the City of London, Britain, January 18, 2018 REUTERS/Peter Nicholls/File Photo
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LONDON (Reuters) - The London Metal Exchange on Thursday launched a wide-ranging bid to revive the fortunes of its troubled nickel contract after the decision last year to halt nickel trading and cancel billions of dollars of trades.

Below are some of the major developments of the crisis:

2022

March 8 - The LME halts nickel trading and cancels trades after prices double to more than $100,000 per tonne in a matter of hours.

March 14 - Britain's Financial Conduct Authority (FCA) says it and the Bank of England are talking to the LME about the resumption of a fair and orderly market in nickel.

March 16 - Amid technical glitches, the LME resumes nickel contract trading with a fixed price range limit.

March 29 - The CEO of the LME's parent company, Hong Kong Exchanges and Clearing, says the LME will see what lessons can be learned from chaotic nickel trading.

April 4 - British financial regulators launch a sweeping probe into how the LME handled the halt in nickel trading, adding that the episode underlines questions about the LME's transparency. The LME says it will commission an independent review into the events.

April 27 - The LME says Adrian Farnham will retire as the CEO of its clearing house, while LME CEO Matthew Chamberlain will stay in his post and not depart as was previously expected.

June 6-7 - The LME says U.S. hedge fund Elliott Associates is suing it for $456 million for cancelling nickel trades. Jane Street Global Trading sues the LME for $15.3 million.

June 23 - The LME appoints management consultants Oliver Wyman to carry out an independent review of the events that led to the suspension of nickel trading.

July 14 - Elliott Associates and Jane Street Global Trading invoke the Human Rights Act as they seek to sue the LME for a combined $472 million.

Sept 16 - Court filings show that hedge fund AQR Capital Management and four other parties have filed legal action against the LME.

Oct 13 - The Bank of England says the LME's clearing house ran down nearly its entire default fund under a stress test of its base metals service.

Nov 16 - The LME says it is undertaking enhanced monitoring after nickel prices fall as much as 12%.

Dec 7 - China's nickel buyers, the world's biggest purchasers of the metal, ask producers to switch to Shanghai Futures Exchange (SHFE) contracts to price their supplies in 2023, two sources tell Reuters.

Dec 23 - A high court judge dismisses a case against the LME brought by hedge fund AQR Capital Management and others that demanded phone call transcripts and meeting notes.

2023

Jan 10 - The LME says it will set out by end-March how it will implement recommendations to prevent market distortions and improve risk monitoring after a review into the 2022 nickel crisis.

Feb 23 - The LME says it will resume nickel trading during Asian hours on March 20, providing a boost for liquidity.

March 3 - The FCA says it has launched an "enforcement investigation" of the LME, while the Bank of England says it will name an independent monitor for the LME's clearing house.

March 6 - The LME faces two fresh lawsuits, filings showed, from ten hedge funds and asset managers.

March 10 - A High Court document shows the head of the LME spent 20 minutes on his mobile phone last year before deciding the market was disorderly and later halting trading.

March 17 - The LME postpones resumption of nickel trading during Asian hours after finding nickel that failed to meet contract specifications at an LME warehouse.

© Reuters. FILE PHOTO: The offices where the London Metal Exchange is headquartered are seen in the City of London, Britain, January 18, 2018 REUTERS/Peter Nicholls/File Photo

March 22 - Nickel delivered by warehouse firm Access World to commodity traders Trafigura and Stratton Metals turned out to be stone, sources say.

March 27 - LME nickel trading resumes during Asian hours after the exchange found no further "irregularities" after an inspection of all bagged nickel warrants in LME-licensed warehouses.

 

 

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