UK fines London Metal Exchange over nickel price spike

LONDON, Mar 20 (AFP): The UK's financial regulator fined the London Metal Exchange £9.2 million ($11.9 million) on Thursday over inadequate systems and controls to deal with a controversial spike in nickel prices in 2022.

The Financial Conduct Authority noted that the LME's nickel price experienced "extreme volatility" in early March that year, with the price more than doubling to above $100,000 a tonne in the space of little over one hour.

"The LME's systems and controls were not adequate to ensure orderly trading under conditions of severe market stress," the FCA said in a statement.

It added that the fine was the first enforcement action by the regulator on a UK investment exchange.

Nickel, used in stainless steel and electric vehicle batteries, spiked on March 8, 2022, to a then-record high of $101,365 on a bad bet from a Chinese billionaire following Russia's invasion of Ukraine.

The LME subsequently decided to cancel all trades made that day and temporarily halted trading.

The FCA said decisions over disorderly markets could be taken only by senior managers, who were not on duty during the time of the spike, which left ill-prepared junior traders to respond.