London Metal Exchange fined £9.2m by City watchdog over nickel price spike
The FCA said the London Metal Exchange ‘should have been better prepared to address the serious risks posed by extreme volatility’.
The London Metal Exchange has been fined £9.2 million by the City watchdog for having inadequate systems and controls in place to deal with a controversial spike in the price of nickel three years ago.
The Financial Conduct Authority (FCA) said the penalty – its first ever against a UK recognised investment exchange – was made after it found the London Metal Exchange’s controls and policies failed to ensure orderly trading in times of “severe market stress”.
Nickel is the metal used in stainless steel and is key to the production of rechargeable lithium ion batteries.
Prices of the metal rose as it became harder to source, due in part to the Ukraine war and sanctions against President Vladimir Putin’s regime, given that Russia is one of the biggest producers of nickel.
Between March 4 and March 8 2022, the trading price of three-month nickel – nickel due for delivery in three months – was between 27,000 and 29,000 US dollars per tonne.
But the price had risen rapidly by the early hours of March 8, peaking at 101,365 US dollars a tonne before trading was suspended, with the decision to cancel trades taken later that day.
