Nickel traders awake to fresh mayhem as LME glitches again
BNN Bloomberg
The London Metal Exchange’s nickel market, thrust into the global spotlight by an unprecedented short squeeze last week, was paralyzed by problems yet again on Thursday.
The London Metal Exchange’s nickel market, thrust into the global spotlight by an unprecedented short squeeze last week, was paralyzed by problems yet again on Thursday.
The start of the second day of trading after a week-long suspension was delayed to 8:45 a.m. after a series of problems hit the LME’s electronic system. First, brokers found that orders to sell at the lower-limit of 8 per cent below Wednesday’s closing price were being rejected, after the LME expanded the trading band the previous day.
Then three trades did appear to go through at that price -- but four minutes before the market had been due to open. Finally, the LME informed brokers that trading wouldn’t restart until 8:45 a.m. and canceled the three earlier trades. When the market finally opened, futures dropped by the daily limit of 8 per cent to US$41,945 a ton. But only two trades had taken place by 10:00 a.m.
The chaotic start to the session piles embarrassment on the LME as it seeks to restore order to the market that sets global prices for one of the world’s most important metals. The crisis in nickel has sparked furious criticism of the exchange for its handling of the situation, from metals markets veterans as well as generalist investors, and several have said they will stop trading on the market.
“Credibility is very quickly slipping through their fingers,” Keith Wildie, head of trading at Romco Metals, said by phone from London. “It’s eroding very rapidly.”
In less than two weeks, traders have had to contend with an unprecedented price spike that created massive margin calls, a weeklong suspension, billions of dollars of canceled trades, and now repeated glitches in the LME’s attempts to reopen the market.
