The ruling quashed the financial firms’ demand for US$472 million in compensation from the LME after it cancelled billions of dollars worth of nickel trades in March last year when prices shot up by more than 270 per cent to record levels above US$100,000 per metric ton in just three days following Russia’s invasion of Ukraine.
The rapid price movement squeezed dozens of short-sellers, including the world’s largest stainless steel producer, Tsingshan Holding Group of China.
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HKEX CEO Nicolas Aguzin on the future of Hong Kong’s capital market
HKEX CEO Nicolas Aguzin on the future of Hong Kong’s capital market
Aguzin said the ruling proved that the LME and its CEO, Matthew Chamberlain, had “acted throughout with the utmost integrity, placing the interest of the market as a whole front and centre at all times.”
“After winning the legal battle, the HKEX can move forward to leverage on the LME platform to further expand its commodities trading and further develop metal trading in the Asian time zone,” said lawmaker Robert Lee Wai-wang, who is also the CEO of brokerage Grand Capital Holdings.
Chamberlain welcomed the court’s decision and said the LME has carried out reforms under an action plan announced in March to strengthen its market infrastructure and restore the confidence of investors.
The action plan is a two-year programme based on the recommendations of management consultancy Oliver Wyman following the nickel controversy. Among the measures, LME has introduced permanent daily price limits for its products, with indicative revised limits of 12 per cent for copper and aluminium.
To rebuild liquidity in its nickel trading, the LME implemented a fast-track listing regime and fee waiver for new nickel brands to boost stock and liquidity in the contract.
The LME’s new plan will also explore cooperation with Qianhai Mercantile Exchange (QME), a subsidiary of HKEX in mainland China, to develop a spot market offering for nickel sulphate and nickel matte, according to an announcement in March.
“It is encouraging to see market vibrancy build – with LME average daily volumes year-to-date now above 2021 levels,” Chamberlain told the Post in an emailed statement on Thursday.
“The support and guidance of our market stakeholders have been invaluable in ensuring our nickel contract remains the key global reference, with volumes continuing to rebuild through the year.
“We remain committed to continue enhancing market resiliency and liquidity for the benefit of our business and the global metals community.”
The exchange will host its annual LME Asia Week 2024 at the HKEX Connect Hall in Central, Hong Kong, on June 27, while the annual LME Metals seminar will be held in London on September 30 next year.
The LME was first founded in 1877 but traces its origins back to 1571 and the opening of the Royal Exchange in London. HKEX bought the London Metal Exchange, the largest metals bourse in the world, in December 2012 in an effort to diversify beyond stock and financial futures trading.