Elliott Management sues LME for $456M over nickel trading debacle

Hedge fund firm Elliott Management has sued the London Metal Exchange (LME) for $456 million over claims related to nickel trading.

The company has filed its case against the exchange in a British court, stating that the leading industrial metals trading and clearing hub’s decision to halt nickel trading in early March was unlawful.

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According to Elliott Management, LME’s action on 8^th March, which was taken after nickel prices skyrocketed by over 250%, was unreasonable, irrational and violated its rights.

At the time, nickel rose to trade at more than $100,000 a ton within hours. The suspension of trading lasted a week, with the nickel market reopened 16 March.

The LME, owned by Hong Kong Exchanges and Clearing Ltd, has dismissed Elliott’s claim as lacking merit. The firm plans to contest the accusation, noting in a statement on Monday that its actions were always in the “interests of the market.”

Elliott Management’s decision to seek legal action against the LME comes at a time the exchange is facing greater scrutiny from European regulators.

Nickel volumes sink

The LME saw a steep decline in nickel volumes in April following the debacle as commodity funds and investors fled. The week-long halt eroded investors’ confidence and trust in the market, with average daily volumes for April down by 28% to 41,431 lots.

According to market data, this was roughly 250,000 tonnes down on trade volumes registered over the same period in 2021. It is also the lowest daily average since July 2012.

Nickel was priced at around $28,000 a ton on Monday.