What’s new: U.S. hedge fund Elliott Associates launched a $456 million lawsuit in the U.K. against the London Metal Exchange for canceling billions of dollars of nickel transactions after chaotic trading in March, the exchange’s parent Hong Kong Exchanges and Clearing Ltd. (HKEX) said Monday.
On March 8, a spike in nickel prices to more than $100,000 a ton within hours led the LME to suspend its nickel market and cancel trades. The LME said the nickel market had become disorderly, and trades were canceled to return the market to a point when it was last orderly.
Elliot Associates said the trade cancellation was “unlawful on public law grounds” and a violation of its rights, according to the HKEX filing. The LME said it views the claim as without merit and will contest it.
The background: Elliot Associates, founded and co-led by American billionaire Paul Singer, is known for activist investing. The hedge fund earned the title of "vulture fund" by its practice of purchasing sovereign debt from Latin American nations under economic pressure in the early 1990s.
The suspension and cancellation of trades served as a bailout for China’s Tsingshan Holding Group Co., which held massive short positions on nickel and faced billions of dollars of losses. But traders with long positions who stood to make substantial profits were unhappy with the exchange’s decision and criticized it as detrimental to their interests.
The exchange is also facing a review by U.K. regulators and is struggling to restore trust and volumes in its nickel market.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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