Nickel squeeze threatens London’s place at heart of metals trade


That status is now under threat. The reason is another short squeeze, this time in nickel, that is wreaking havoc through the metals world. Investors are furious with the LME for allowing prices to soar 250% in less than two days, then retroactively canceling $3.9 billion in trades. When it tried to reopen the market, the exchange’s electronic trading system malfunctioned repeatedly.

The LME’s outsized role in how industrial metals are bought and sold means that angry traders and investors have few alternatives. But the fallout from the nickel squeeze will cast a long shadow, embroiling the exchange in investigations and lawsuits for years, and raising questions about its structure, ownership and oversight. 

“Suddenly the LME just looks incompetent,” says Mark Thompson, a mining executive and former metals trader at Trafigura Group who has emerged as one of the exchange’s most outspoken critics. “They need root-and-branch…

Read more…