LME introduces 15% daily price limits for all metals

London Metal Exchange – (Image from archives)

The London Metal Exchange said it had introduced daily price limits for all its metals and would commission an independent review into the events that led to chaos in the nickel market last month.

The LME has brought in 15% upper and lower daily price limits for all of its physically delivered metals plus cash-settled cobalt, it said on Monday.

The exchange suspended nickel trading on March 8 after prices spiked by more than 50% to hit $100,000 a tonne. Activity resumed on March 16 when it launched daily price limits and the provision of OTC nickel trading data for the first time.

The price surge was blamed on short-covering by one of the world’s top nickel producers, China’s Tsingshan Holding Group. The LME has said the large short positions originated primarily from the over-the-counter (OTC) market.

The exchange also said it wanted to introduce OTC trade reporting across the board and that a first step was to extend the provision of OTC daily position reporting, as is now implemented for nickel, to other metals.

The LME said it welcomed an announcement by British financial regulators who said on Monday that they would review the way the exchange handled the halt in nickel trading last month.

It added that it would also commission an independent review of events leading up to the trading suspension in an attempt to prevent a repeat of such a situation.

(By Swati Verma; Editing by David Goodman and Pravin Char)

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