LME faces probe by UK regulators over nickel trade suspension

The London Metal Exchange’s (LME) handling of a nickel trading suspension during chaotic trading last month after Russia’s invasion of Ukraine is being probed by UK regulators.

Nickel, a key component of batteries for electric vehicles, soared more than 50%, on March 8 to hit $100,000 a tonne.

Britain’s Financial Conduct Authority (FCA) said it and the Bank of England would determine if further action should be taken, adding the trading stop had underlined questions previously raised about the structure of the market and “particularly the role of transparency”.

"The FCA has been in discussion with the LME on its proposals for some time and expects the LME to consider carefully how recent events should shape its future approach on market structure," they said in a joint statement.

In response, the LME said it welcomed the announcement from regulators and added it would commission its own review of the events to identify action to minimise the risk of a disorderly market in future.

“The LME fully recognises the impact of these events on a broad spectrum of market participants, and understands that not all participants agreed with the course of action undertaken. The LME sought to act in the interests of the market as a whole and acknowledges the concerns expressed by some market participants,” the exchange said.

It added that it had already identified one problem with its lack of visibility of trades that happened outside the exchange – known as “over-the-counter” trades – that helped to drive the price up.

The exchange introduced a 15% upper and lower daily price limit for all its physically delivered metals after the chaotic trading period.