{"id":40055,"date":"2022-06-07T05:57:00","date_gmt":"2022-06-07T05:57:00","guid":{"rendered":"https:\/\/harchi90.com\/lme-hit-by-450mn-lawsuit-from-elliott-management-over-nickel-market-chaos\/"},"modified":"2022-06-07T05:57:00","modified_gmt":"2022-06-07T05:57:00","slug":"lme-hit-by-450mn-lawsuit-from-elliott-management-over-nickel-market-chaos","status":"publish","type":"post","link":"https:\/\/harchi90.com\/lme-hit-by-450mn-lawsuit-from-elliott-management-over-nickel-market-chaos\/","title":{"rendered":"LME hit by $ 450mn lawsuit from Elliott Management over nickel market chaos"},"content":{"rendered":"
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US hedge fund Elliott Management is suing the London Metal Exchange for more than $ 456mn over its decision to cancel nickel trades in March after an unprecedented surge in the price of the metal.<\/p>\n

The judicial review claim was filed against the LME and its clearing house last week, according to a statement issued on Monday by Hong Kong Exchanges and Clearing, the LME’s parent company.<\/p>\n

LME will contest the claim \u201cvigorously\u201d and views it as \u201cwithout merit\u201d, HKEX said. It has 21 days to file a response – at which point a UK court will decide whether there is a case to hear. <\/p>\n

The legal action heaps further pressure on the 145-year-old exchange, which is battling to repair its reputation as UK financial regulators examine its handling of the crisis.<\/p>\n

The decision to suspend trading on March 8 came after nickel surged as much as 250 per cent in just two days to trade briefly above $ 100,000 a tonne. The violent price spike was triggered by a short squeeze as banks and brokers rushed to close part of a large position amassed by Xiang Guangda, the billionaire founder of China’s leading stainless steel producer Tsingshan Holding Group.<\/p>\n

Elliott alleges the LME “acted unlawfully in that it exceeded its powers when it canceled those trades, or that it exercised the powers that it did have unreasonably and irrationally”. <\/p>\n

It also claims that the LME considered \u201cirrelevant factors (including its own financial position)\u201d and failed to take \u201cother relevant factors\u201d into account when it made the decision. <\/p>\n

The $ 456mn being claimed by Elliott is roughly equivalent to about 9,000 tonnes of nickel being sold at $ 50,000 a tonne – the price nickel was reset at after the trades were canceled – rather than the peak of $ 100,000 it hit on March 8. Nickel is now trading at almost $ 29,000 a tonne.<\/p>\n

The LME’s decision to erase a day of trading because of the price surge – which it claimed pushed several smaller members of the exchange to the brink of failure – provoked uproar among some traders who saw their profits wiped out by the move.<\/p>\n