UK Regulators to Probe Into Halted Nickel Trading at London Metal Exchange

SEATTLE (Scrap Monster): The UK financial regulators announced that they have launched a sweeping probe into how the London Metal Exchange (LME) suspended nickel trading last month.

According to industry sources, the action by the Financial Conduct Authority (FCA) and the Bank of England (BoE) is aimed at ensuring London to be regarded as a well-run financial centre, especially at a time when it faces challenges from competitors. It must be noted that LME is the world’s oldest and largest market for industrial metals.

Meantime, the regulators said that the sudden halt in trading has raised questions about the transparency of the 145-year old exchange and that they would soon determine if further actions are to be taken.

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The FCA will investigate how the exchange handled the situation, while the probe by BME will look into the LME’s clearing house transactions. The FCA and the Prudential Regulation Authority will also examine the firms that held significant positions. In addition, LME announced that it will commission its own independent probe.

The LME welcomed the probes by British financial regulators, saying that it will help to identify actions to minimise such risks in future.

The LME had halted trading on March 8^th after nickel prices spiked by more than 50% in a matter of few hours to hit $100,000 per tonne. The trading resumed on March 16^th, after imposing price limits.