Jane Street files suit over LME nickel trading crisis

Another US financial conglomerate has sued the London Metal Exchange over the nickel trading crisis, it emerged on Tuesday, with Jane Street making the latest legal claim against the exchange.

Jane Street Global Trading said it was claiming $15.3m (£12.23m) in the suit, over the large-scale cancellation of nickel trades in March that led to an ongoing volume and liquidity squeeze in the market for the metal.

“[The cancellation of trades] during a period of heightened volatility severely undermines the integrity of the markets and sets a dangerous precedent that calls future contracts into question,” Reuters quoted a Jane Street spokesperson as stating.

In response, LME owner Hong Kong Exchanges & Clearing said it saw the claim as “without merit”, adding that it would “contest it vigorously”.

The lawsuit from Jane Street came after two Elliott Investment Management funds filed similar claims in the High Court on Monday, seeking a total of $456m in damages.

HKEX issued a similar response to that claim, also describing it as lacking merit.

The LME halted trading in nickel and cancelled short bets two months ago, itself unwinding billions of dollars worth of transactions and keeping trading closed for more than a week.

Since then, the market for the ferromagnetic metal has been stuck in what Bloomberg described as an “extended limbo”, suffering from a lack of liquidity and excessive volatility.

At the time, the LME defended the move as being necessary to maintain orderly trading in the market.

Reporting by Josh White at Sharecast.com.