London Daily

Focus on the big picture.
Friday, Jun 20, 2025

UK regulators probe LME's halt to chaotic nickel trading

UK regulators probe LME's halt to chaotic nickel trading

British financial regulators launched a sweeping probe on Monday into how the London Metal Exchange (LME) suspended chaotic nickel trading last month, a move that prompted angry protests from market participants and damaged the exchange's reputation.

The intervention from the Financial Conduct Authority (FCA) and the Bank of England (BoE) was unusually broad and hard-hitting, aimed at ensuring London is seen as a well-run financial centre as it faces rising competition, industry sources said.

The LME, the world's oldest and largest market for industrial metals, suspended nickel trading on March 8 after prices spiked by more than 50% in a matter of hours to hit $100,000 a tonne.

When trading resumed on March 16, the LME had technical glitches for several days after imposing price limits, leaving traders fuming.

The new probes highlight a wave of criticism of the LME both from those who wanted the market to remain open and others faulting the LME for delaying action.

Malcolm Freeman, chief executive of broker Kingdom Futures, said there were several warning signals but the LME had no choice but to suspend trading.

"You could have seen every single storm cloud brewing on the Friday (ahead of the Tuesday closure)," he said.

"But if it had been left going, you would have had billions of pounds of debt, LME brokers blown out of the water and the exchange technically insolvent."

Regulators said the episode underlined questions about the transparency of the 145-year-old LME and they would determine if further action should be taken.

Several investigations will be held. The FCA will look at how the exchange handled the situation, the LME will commission its own independent probe, while the BoE will look into the LME's clearing house.

PRICE LIMITS


The LME welcomed the probes and said its own review hoped to identify actions to minimise the risk of a disorderly market in future. It noted it had introduced 15% upper and lower daily price limits for all its physically delivered metals when it restarted nickel trading.

Stable financial markets are important for Britain, which is hoping the EU will allow clearing houses like LME Clear to continue serving customers in the bloc after June 2025.

Britain's departure from the EU has largely severed the country's financial services ties with the bloc.

The FCA and the Prudential Regulation Authority will examine firms that held significant positions to assess their risk management and governance.

The surge in prices that triggered the halt was blamed on short-covering by one of the world's top producers, China's Tsingshan Holding Group.

Tsingshan has acknowledged it had a position and announced a standstill agreement with banks. The LME has not named Tsingshan and keeps confidential its members' positions.

The LME, owned by Hong Kong Exchanges and Clearing Ltd (0388.HK), has said large short positions in nickel originated primarily from the over-the-counter (OTC) market organised by banks and brokers.

Other participants during the nickel crisis had long positions and stood to benefit from the spike in prices.

"It's not an easy situation to resolve,” said Tom Price, head of commodities strategy at Liberum.

"We've got what seems to be a guy with a massive short position, and a situation where we may never know if he was protected by the LME or that the LME was simply protecting its platform and its wider community of traders," Price said.

"Those who lost the opportunity of making money on this short-covering activity are still furious and expect a real outcome from the investigation."

Newsletter

Related Articles

0:00
0:00
Close
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
Trump Organization Launches 5G Mobile Network and Golden Handset
Towcester Hosts 2025 English Greyhound Derby Amid Industry Scrutiny
Gary Oldman and David Beckham Knighted in King's Birthday Honours
Over 30,000 Lightning Strikes Recorded Across UK During Overnight Storms
Princess of Wales Returns to Public Duties at Trooping the Colour
Red Arrows Use Sustainable Fuel in Historic Trooping the Colour Flypast
Former Welsh First Minister Addresses Unionist Concerns Over Irish Language
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
France Bars Israeli Arms Companies from Paris Defense Expo
King Charles Leads Tribute to Air India Crash Victims at Trooping the Colour
Jack Pitchford Embarks on 200-Mile Walk to Support Stem Cell Charity
Surrey Hikers Take on Challenge of Climbing 11 Peaks in a Single Day
UK Deploys RAF Jets to Middle East Amid Israel-Iran Tensions
Two Skydivers Die in 'Tragic Accident' at Devon Airfield
Sainsbury's and Morrisons Accused of Displaying Prohibited Tobacco Ads
UK Launches National Inquiry into Grooming Gangs
Families Seek Closure After Air India Crash
Gold Emerges as Global Safe Haven Amid Uncertainty
Trump Reports $57 Million Earnings from Crypto Venture
Trump's Military Parade Sparks Concerns Over Authoritarianism
Nationwide 'No Kings' Protests Challenge Trump's Leadership
UK Deploys Jets to Middle East Amid Rising Tensions
Trump's Anti-War Stance Tested Amid Israel-Iran Conflict
Germany Holds First Veterans Celebration Since WWII
U.S. Health Secretary Dismisses CDC Vaccine Advisory Committee
Minnesota Lawmaker Melissa Hortman and Husband Killed in Targeted Attack; Senator John Hoffman and Wife Injured
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
×