The London Metal Exchange (LME), a major global trading platform, is embroiled in a significant legal dispute over its decision to suspend and cancel nickel trades. The decision has led to a lawsuit filed by fund manager Elliot Associates and Jane Street Global Trading.
In a turn of events, the LME has won the High Court case against the US hedge fund, who are seeking almost US$0.5B after losing out on soaring nickel prices.
The controversy began when the LME decided to cancel all nickel trades and instigated a total suspension 8 March 2023. This decision was made in response to a dramatic increase in nickel prices over a short period, partly due to sourcing difficulties as a result of the ongoing conflict between Russia and Ukraine—Russia is one of the world’s biggest producers of the metal.
Elliott Associates therefore retaliated against the LME by suing for £365M following the suspension. The hedge fund alleges that the LME’s decision to cancel trades was “unlawful” and “constituted a violation” of its rights.
A further three claims were issued in the English Commercial Court against the LME and LME Clear in March 2023 by claimants seeking damages under the Human Rights Act 1998.
The claimants are:
- AQR Capital Management LLC
- DRW Commodities LLC
- Flow Traders BV
- Capstone Investment Advisors LLC and Winton Capital Management Limited
- Commodity Asset Management LLC
- Pala Investments Limited
- Pentimon Limited
- Welton Investment Partners LLC and Sunrise Capital Partners LLC
- Double Eight Limited
The LME reported that as these additional lawsuits do not raise any issues that are not already the subject of the claims brought by Elliott and Jane Street, the parties have agreed a stay of these additional lawsuits pending the final determination of the Elliott and Jane Street lawsuits.
In response, the LME stated that the claim is without merit and will be contested vigorously. The LME management believes that the decision to suspend trading was made because the nickel market had become “disorderly” and that it had “always acted in the interests of the market as a whole”.
The LME and LME Clear filed their detailed grounds of defence in November 2022. The Judicial Review hearing commenced on 20 June 2023 and the case was heard as a split trial.
The LME remains confident that it will successfully defend ongoing claims brought against it.