The cancellation of nickel trades in March a few months ago led London Metal Exchange to receive a fine for as much as $15.3m. The U.S. based Jane Street Global Trading sued London Metal Exchange for this cancellation. Hong Kong Exchanges and Clearing owned the London Metal Exchange. Regulators found out that the firm had halted activities and canceled trading on nickel.
The firm is leading the metals trading including the majority of all non-ferrous metal future business. As a member of Hong Kong Exchanges and Clearing, the company aims at bringing a robust and regulated market. So far, London Metal Exchanges seeks a vibrant futures exchange that links to the industry. It provides physical delivery via the worldwide network.
London Metal Exchange argued that the firm saw high volatility. The volatility led to double pricing to more than $100.000 a tonne just within hours. A representative from Jane Street Global Trading argued that it inflicted a dangerous signal. Cancelation during a period of volatility undermines the integrity of the market. Worse, it could signal a dangerous precedent that leads future contracts into uncertainties.
On the other hand, the Hong Kong bourse counters the argumentation. They argued in a statement that the London Metal Exchange was considered to be without merit. Thus, London Metal Exchange would contest it vigorously. They said it to the U.S. quantitative fund as well as market makers.
The firm announced the fine a few days ago. Hedge fund Elliott Associates has sued the firm for $456m for canceling nickel trades. Hong Kong Exchange and Clearing responded to the Elliott suit. They have argued that London Metal Exchange had to decide for the sake of market protection. This is reflecting to the current disruptions in the market.