The London Metals Exchange has been hit with a $456 million lawsuit over the suspension and cancellation of nickel trades.
The LME’s parent, the Hong Kong Exchanges and Clearing 388, +1.64%, announced the lawsuit that was filed against it by the hedge fund giant Elliott Associates.
“The claim seeks to challenge the decisions giving effect to and maintaining the cancellation of the Claimants’ alleged trades in nickel contracts executed on or after 00:00 UK time on 8 March 2022. The Claimants have alleged that this was unlawful on public law grounds and/or constituted a violation of the Claimants’ human rights,” the exchange said.
The LME cancelled trades after nickel futures soared in value, past $100,000 per ton. The cancellation saved billions for Tsingshan Holding Group, a Chinese nickel maker that had gone short the industrial metal. The LME cancellations also benefited Tsingshan’s lenders, which included JPMorgan Chase and China Construction Bank.
The Hong Kong exchange again defended itself, saying the nickel market had become disorderly and the LME always acted in the interests of the market as a whole.
In a statement, Elliott confirmed the proceedings. “Elliott considers that when the LME cancelled Nickel trades on 8th March 2022 it acted unlawfully in that it exceeded its powers when it cancelled those trades, or that it exercised the powers that it did have unreasonably and irrationally in particular by taking into account irrelevant factors (including its own financial position) and failing to take into account relevant factors,” the fund said.
