The London Metal Exchange faces a lawsuit threat after being forced to cancel the nickel trade
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 stock market provoked outrage from companies that lost when it canceled trades as the price of nickel rose.
These hedge funds, including New York’s AQR Capital Management, are seeking legal opinions on whether or not to sue the LME.
The London Metal Exchange provoked outrage from companies that lost when they canceled trades as the price of nickel rose
The chaos began when Russia’s invasion of Ukraine created fears of the supply of nickel. This pushed up the prices of the metal used in electric car batteries and steel production.
Some investors shorted nickel – meaning they bet the price would fall. A big shorter was Tsingshan Holding Group, a Chinese manufacturer.
As the price rose, Tsingshan had to buy into nickel – pushing the price to over $ 100,000 in a matter of hours, and the LME suspended trading.
It also canceled several trades, which meant that funds like AQR, which were supposed to have a massive profit, made their profits disappear.
Clifford Asness, head of AQR, tweeted: “In legal terms, I’m really curious if they use their power, which I give is probably buried in the documents, to explicitly favor one side because of complete corruption, things are changing.”
Nickel now costs $ 28,290 per tonne. ton.
LME declined to comment.
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