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The court rejected the lawsuit of hedging base needle against the sharp fall of LME4 billion USD nickel price

General Introduction

Based on the news on December 23, 2022, a London High Court rejected a case against the London Metal Exchange (LME). In this case, some hedge funds sought to understand the exchange’s decision to cancel about $4 billion of nickel trading on March 8.


AQR Capital Management Company – as well as DRW Commodities, Flow Traders, Capital Investment Advisors and Winton Capital Management – filed a lawsuit against the exchange, arguing that LME did not make an appropriate or comprehensive explanation for its decision to cancel nickel trading on March 8. On March 8, the exchange cancelled a $4 billion transaction, after a short position held by Chinese stainless steel manufacturer Tsingshan caused the nickel price to soar by more than 240%. The move wiped out about $1.3 billion in gains for long position holders. After the incident, nickel trading was suspended for more than a week. In a December 23 ruling, Justice Adrian Bertrami pointed out that AQR and other parties estimated that they had personally lost 95 million dollars due to LME’s decision, but he said that he believed that “the legal basis of this case is insufficient”.

‘ This is certainly not the case where LME did not explain its situation. As I pointed out, it tries to explain its behavior in some detail. ‘

                                                                                                                                                                                                Hogan Lovells, LME lawyer, defended.

However, Judge Bertrami said that his feeling was that the real complaints of the companies that filed lawsuits against LME were:

‘ They did not accept that what LME said was correct. Therefore, before they decide whether it is worthwhile to file a lawsuit, they want to see the basic documents and obtain early evidence to determine whether the explanations made so far are (or are not in fact) incomplete or wrong. ‘

Cliff Asness, AQR’s boss, pointed out in a Twitter message that the company knew that the court’s move would be a challenge.

‘ Alas, we know that this is a tough battle, because LME has the greatest power here, but I will not give up any of my previous ideas. What they are doing here is wrong. ‘

A spokesman for LME said:

‘ This application was wrong from the beginning – LME has made a detailed explanation of its decision – we are glad that it was completely rejected. ‘ 

Post Time: 2022-12

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