The Managed Funds Association (MFA), a powerful Washington lobby group, has accused the London Metal Exchange (LME) of failing to manage its “conflicts-of-interest,” as the market faces mounting criticism over its decision to halt nickel trading last March.
In comments submitted to the LME, the industry body which represents hedge funds with £2.6trn worth of assets, hit out at the metals exchange, as it claimed the LME had “undermined confidence in its ability to oversee markets.”
The MFA also called on the LME to “redress” its “regulatory shortcomings” as it said the Hong Kong owned metals market had failed in its obligations to “maintain an orderly market, manage conflicts of interest and protect investors in the nickel market.”
The comments come after the LME halted trading in March, after nickel prices soared 250 per cent over a two-day period, following Russia’s invasion of Ukraine.
The MFA’s allegations of “conflicts of interest” come after Elliot Management sued the exchange earlier this week, after accusing the market of cronyism.
The metals market’s decision to halt trading and cancel trades came as soaring prices threatened to wreck Chinese billionaire Xiang Guangda’s bet that nickel prices would fall.
This week, Wall Street behemoths Jane Street Capital and Elliott Management also both sued the LME, over its decision to halt trading and cancel trades, after nickel prices shot up to heights of $100,000 per tonne.
The LME’s nickel price fiasco has also seen the 145-year-old market face scrutiny from regulators, including the UK’s Financial Conduct Authority (FCA) and the Bank of England (BoE).