LME says disclosure request over nickel meltdown 'without merit'

The London Metal Exchange plans to defend itself against legal action filed by five investment firms over the exchange's decision to suspend nickel trading in early March, a spokesperson said Sept. 20.

AQR Capital Management, DRW Commodities, Flow Traders, Capstone Investment Advisors and Winton Capital Management filed an application Sept. 7 in the London Commercial Court. The investment firms are requesting the disclosure of certain documents linked to the market halt, which was triggered by a short squeeze that sent the three-month nickel price to over $100,000/mt.

"We consider that application to be without merit, and we look forward to setting out our arguments opposing the application in due course," the LME spokesperson told S&P Global Commodity Insights.

The exchange's suspension of the nickel market and the cancellation of certain nickel trades "caused significant losses for many market participants," the petitioners said in a group statement sent to S&P Global.

"Given the circumstances surrounding the suspension, the unprecedented decision to cancel agreed-upon trades in these circumstances, and the [LME's] own piecemeal disclosures regarding its actions, the applicants seek disclosure of certain documents from the [LME] to enable them to assess their legal position," the petitioners said.

The LME is already facing lawsuits from Elliott Management Corp. and Jane Street Global Trading seeking a combined $471.7 million due to the market disruption.

Management consulting firm Oliver Wyman is conducting an independent review into the trading suspension, with the final report expected in December.

Commodity Insights reporter Karl Decena writes for S&P Capital IQ Pro. S&P Global Commodity Insights is owned by S&P Global Inc.