LME hit by $450mn lawsuit from Elliott Management over nickel market chaos

U.S. hedge fund Elliott Management is suing the London Metal Exchange for more than $ 456 million for its decision to cancel nickel deals in March after an unprecedented rise in the price of metal.

Elliott Filed the lawsuit using two vehicles against LME and LME Clear, the stock exchange’s clearing house, on June 1 in the UK High Court of Justice, LME owner Hong Kong Exchanges and Clearing said on Monday.

The Florida-based group’s lawsuit, set up by billionaire Paul Singer, argued that the cancellation of the Nickel contract deals on March 8 was “illegal on the grounds of public law and / or a violation of plaintiffs’ human rights.”

LME Will appeal the lawsuit “vigorously” and see it as “unfair,” HKEX said.

Elliott’s lawsuit relates to the 145-year-old stock exchange’s decision to cancel one-day worth of nickel trades and suspend trading for eight days in March.

This will add to the plight of the stock market as it struggles to rebuild its reputation as a world leader in trading industrial metals including nickel, used in the manufacture of stainless steel and batteries for electric vehicles.

The decision to stop trading came following a 250 percent rise in the price of nickel to a record $ 100,000 per tonne that was Activated by a short press When banks and brokers rushed to close part of a large position accumulated by Xiang Guangda, the billionaire founder of China’s leading stainless steel manufacturer Tsingshan Holding Group.

Nickel is currently traded at more than $ 28,000 per tonne.

LME’s decision to cancel a trading day due to rising prices – which it claims has pushed some smaller members of the stock market to the brink of failure – Caused a stir among some merchants Who saw their profits erased from the move.

AQR Capital Management, one of the largest hedge funds in the world, has explored legal options in its dispute, said people familiar with the issue in March. The fund’s founder accused the LME of “reversing transactions to save your favorite associates and rob your non-associate clients.”

The LME denied that the parent company HKEX influenced its decision.

The move also caused financial regulators in the UK In April to launch a review To the “wild market” in nickel contracts during the period.

LME CEO Matthew Chamberlain backed down from the decision to leave the Komainu digital assets startup in April, when the stock market struggled to restore its reputation. It also launched an overview of the chaos in the nickel market.

The LME said one of the reasons it did not respond earlier to the nickel price divide is that it did not know how much business is done without a prescription using derivatives.

Chamberlain is trying to push a plan for more ongoing reporting of these positions on all metals that have been physically delivered by the LME. However, members have in the past opposed similar moves for greater transparency.

The stock exchange also said in March that it would almost double the size of the fund that protects the entire market from the sudden collapse of one of its members.

Elliott did not immediately respond to a request for comment.

LME hit by $450mn lawsuit from Elliott Management over nickel market chaos Source link LME hit by $450mn lawsuit from Elliott Management over nickel market chaos

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