Friday March 21 2025
News Source: Global Exchanges
Focus: General - Global Exchanges
Type: General
Country: UK
On 20th March 2025, the Financial Conduct Authority (FCA) has fined the London Metal Exchange (LME) £9.2 million for failing to ensure its systems and controls were adequate to deal with severe market stress.
Between 4 and 8 March 2022, the price of LME’s 3-month nickel futures contract encountered extreme volatility. This culminated in the early hours of 8 March 2022 when its price rose to over $100,000, more than double the closing price on 7 March 2022, with most of the rise occurring in little over an hour. These events undermined the orderliness of and confidence in LME’s market.
The LME suspended its nickel market for 8 days and cancelled all nickel trades that took place on 8 March.
The LME’s systems and controls were not adequate to ensure orderly trading under conditions of severe market stress. In particular, LME did not have adequate controls or policies relating to the operation of its automatic volatility controls, its ‘price bands’.
The LME accepted the findings and so qualified for a 30% reduction in its financial penalty.
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