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London Metal Exchange fined $11.9 million by UK watchdog for 2022 nickel crisis

London Metal Exchange fined $11.9 million by UK watchdog for 2022 nickel crisis

The Financial Conduct Authority of Britain (FCA), announced on Thursday that it had fined the London Metal Exchange 9,2 million pounds ($11.90million) for failing to maintain its systems and controls. This was the first time a UK exchange has been sanctioned.

The FCA investigated the LME in relation to the nickel crisis of 2022. The LME suspended the nickel market on March 8, 2022 after the price of nickel jumped above $100,000 per metric ton.

The LME, which is the oldest and largest industrial metals market in the world, acknowledged the FCA findings. It added that the enhanced processes that are now in place will strengthen the resilience of their markets.

The LME accepted that, in March 2022 when the effects of large OTC positions spilled onto the LME nickel market, LME prices rose faster than if certain LME controls and systems had been a better defense.

The FCA stated that "(the) LME did have inadequate controls or policies in relation to its automatic volatility control, its "price bands"."

The regulator stated that "decisions regarding market orderliness can only be made by senior managers. However, LME's procedures for alerting these managers to unusual or dangerous market conditions were insufficient." (Reporting and editing by Louise Heavens, David Evans, and Polina Devtt)

(source: Reuters)