The Managed Funds Association has filed a formal complaint with the London Metal Exchange, alleging it failed to fulfill its regulatory duties when it canceled thousands of nickel trades in March.
The letter from the MFA, which represents many of the world’s biggest hedge funds, came three months after the LME caused an outcry among some users for canceling eight hours of activity on its nickel market.
Pressure from a short seller sent the price of the metal up 250% in just a few days, to $100,000 a ton. The LME’s parent company, Hong Kong Exchanges and Clearing, said earlier this week that the LME’s decision was made because the market had become “messy”.
The MFA complaint follows calls for a judicial review of reversals filed by US activist group Elliott Management and market maker Jane Street. They are asking for $456 million and $15 million respectively.
“The LME has undermined confidence in its ability to monitor the markets by failing to meet its regulatory obligations to maintain an orderly market, manage conflicts of interest and protect investors in the nickel market,” Jennifer Han said. , Chief Counsel at the MFA. The MFA complaint also alleged that the exchange was seeking to protect its clearing house.