LME: No timeline yet on nickel review process

An April announcement from the London Metal Exchange (LME) regarding last month’s nickel contract turbulence indicates the exchange will conduct an internal review process to join one being conducted by the Bank of England and the United Kingdom’s Financial Conduct Authority (FCA).

The announcement from LME executives Matthew Chamberlain and Adrian Farnham says in part, “LME Group welcomes [the] announcement by the FCA and the Bank of England, in respect of a review of the actions taken in response to events in the nickel market to determine what lessons might be learned.”

Regarding its own, parallel review, LME states, “LME Group will commission an independent review of broader events in the nickel market leading up to the suspension to identify any actions that could be taken to minimize the risk of a disorderly market arising in future. The LME Group will engage an experienced independent party (or parties) to undertake the independent review.”

While the LME says it intends to appoint those reviewers “as soon as practicable,” it also says “the full and detailed scope of the independent review has yet to be determined” and that the timeline for the review will not be established until the independent reviewer has been selected.

Procedurally, the LME says the independent reviewers “will have access to all the relevant data in respect of trading activity and position holdings for the period under review. Where and when appropriate, the LME Group will use its rulebook powers to obtain over-the-counter (OTC) and other data from market participants, and make this data available to the independent party that will be undertaking the independent review.”

The LME adds, “All market participants will be welcome to submit their views to the independent party.”

In the meantime, the LME says it has received “broad support for retaining” the 15 percent “upper and lower daily price limits for all of its physically delivered metals.”