Hedge fund Elliott sues LME for $456 million over nickel trading halt

Merchants work on the ground of the London Metallic Alternate in London, Britain, September 27, 2018. REUTERS/Simon Dawson/File Picture

HONG KONG/LONDON, June 6 (Reuters) – U.S. hedge fund Elliott Associates is suing the London Metallic Alternate (LME) for $456 million for cancelling nickel trades after chaotic buying and selling in March that compelled the change to droop its nickel market, the LME mentioned on Monday.

The authorized motion piles extra stress on the change, which is being probed by regulators and is struggling to revive belief and volumes in its nickel market. learn extra

Elliott mentioned the LME shouldn’t have halted buying and selling and erased offers after costs greater than doubled to over $100,000 a tonne in a matter of hours on March 8. learn extra

The LME and LME Clear Restricted had been named as defendants within the judicial evaluate declare filed in a British court docket by Elliott Associates and Elliott Worldwide final week, the LME’s mother or father firm Hong Kong Exchanges and Clearing Ltd (0388.HK) mentioned.

An Elliott spokesperson mentioned in an electronic mail that the LME had acted “unreasonably and irrationally specifically by taking into consideration irrelevant components, together with its personal monetary place”.

The LME, the world’s largest and oldest marketplace for industrial metals, mentioned it needed to take motion to guard the market as a complete when buying and selling grew to become disorderly.

In an announcement, the change mentioned it had “an necessary position to play in making certain the market is truthful and orderly for all those that want to take part”.

It added that the nickel market had develop into disorderly, and that it had cancelled offers from midnight to 0815 GMT on March 8 in an try and return the market to the time when it had final been orderly.

“The LME subsequently considers that Elliott’s grounds for criticism are with out benefit, and the LME will defend any judicial evaluate proceedings vigorously.”

LME SUED NEARLY A DECADE AGO

Elliott Administration, based and co-led by billionaire Paul Singer, is understood for activist investing. The Elliott spokesperson didn’t say within the electronic mail what LME nickel positions it had when offers had been cancelled.

The final time the LME was sued was almost a decade in the past when Russian aluminium big Rusal sought to derail proposed LME reforms aimed toward easing big backlogs to withdraw metallic from its world warehousing community.

The LME initially misplaced the case, however won an appeal permitting it to go ahead and implement the reforms.

Final month, the LME proposed measures that it mentioned would enhance transparency and stability within the over-the-counter (OTC) metals market, together with extra frequent disclosures of all positions.

HKEX shares closed up 1.6%, underperforming the broader market index (.HSI), which gained 2.7%.

Reporting by Selena Li and Eric Onstad; Enhancing by Florence Tan, Kim Coghill, Kenneth Maxwell and Jan Harvey

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