The London Metal Exchange and LME Clear have been named defendants in a judicial review claim filed by New York investment firm Elliott Associates. The suit, served on Thursday, is related to the nickel trading suspension on March 8.
“The claim seeks to challenge the decisions giving effect to and maintaining the cancellation of the claimants’ alleged trades in nickel contracts,” read the statement released by Hong Kong Exchanges and Clearing, LME’s parent company.
The exchange suspended the nickel market on March 8 after the price skyrocketed beyond US$100,000/tonne in just a few hours, after Chinese nickel producer Tsingshan Holdings Group covered its massive short position on the resource. It canceled US$3.9 billion worth of trades, plummeting the price back to US$50,000.
The claimants are seeking US$456,391,500 in restitution.
However, what’s interesting is that the claimants are also alleging that the nickel trading suspension “was unlawful on public law grounds and/or constituted a violation of the claimants’ human rights.”
“The LME management is of the view that the claim is without merit and the LME will contest it vigorously,” HKEX added.
Following the March 8 halt, LME imposed a 5% price limit, up or down, to regulate the trading. However, when the nickel market opened on March 16, the price went below the limit at US$45,590. Due to systems error, LMEselect still “allowed a small number of trades to be executed below this lower daily price limit.” This prompted the exchange to halt once again the nickel trade.
The claim has been filed in England’s High Court of Justice.
Information for this briefing was found via HKEX. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.