LONDON (Reuters) – A British financial watchdog on Friday launched its first ever investigation of a UK exchange for possible misconduct after the London Metal Exchange’s decision last year to halt nickel trading and cancel billions of dollars of trades.
Below are some of the major developments of the crisis which led to the probe:
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 – CEO of 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 the nickel trading, adding that the episode underlines questions about 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 the LME’s 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 while 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 are invoking 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 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, asked 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 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.
(Compiled by Polina Devitt; editing by Pratima Desai and Susan Fenton)
