London Metal Exchange facing lawsuit threat after being forced to cancel nickel trading
The London Metal Exchange (LME) is facing the threat of a lawsuit brought by angry hedge funds following last week’s nickel trading debacle.
The exchange prompted fury from firms who lost out when it cancelled trades as the price of nickel spiked.
Those hedge funds, including New York’s AQR Capital Management, are seeking legal opinions on whether they can sue the LME.
The London Metal Exchange prompted fury from firms who lost out when it cancelled trades as the price of nickel spiked
The chaos began when Russia’s invasion of Ukraine prompted fears over the supply of nickel. This pushed up prices of the metal, used in electric car batteries and steel production.
Some investors were shorting nickel –meaning they were betting that its price would fall. A big shorter was Tsingshan Holding Group, a Chinese producer.
As the price rose, Tsingshan had to buy into nickel – pushing the price to above $100,000 in a matter of hours, and the LME suspended trading.
It also cancelled several trades meaning funds such as AQR, which were due to make a massive profit, saw their winnings disappear.
Clifford Asness, the boss of AQR, tweeted: ‘In legal terms I’m really curious if them using their power, which I grant is likely buried in the documents, to explicitly favour one side because of flat out corruption, changes things.’
Nickel is now $28,290 a ton.
LME declined to comment.