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LME to require weekly OTC position reporting as it seeks to address nickel chaos
- LME CEO Matthew Chamberlain has said the lack of transparency in OTC positions made it difficult to manage the nickel situation
- New reporting requirement is part of expected reforms to address conditions that led to a week-long suspension of nickel trading in March
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Chad Brayin London
The London Metal Exchange (LME) said it would require members to report off-exchange positions in some metals weekly as it seeks to address issues that helped fuel a chaotic period in the nickel market earlier this year.
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The Hong Kong Exchanges and Clearing (HKEX)-owned bourse halted trading in nickel and cancelled thousands of trades in the early hours of March as soaring prices threatened to destabilise the market amid a short squeeze that triggered billions of dollars in margin calls.
Last month, the LME first proposed that its members report their over-the-counter (OTC) positions on a weekly basis for metals contracts that require the metal to be physically delivered when a futures contract expires, including contracts for aluminium, copper, nickel, tin and zinc.
Following a consultation, the LME said on Friday it would introduce a weekly OTC position reporting framework beginning on July 18.
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“This enhancement of the LME’s visibility of OTC markets is, we believe, in the interests of the market as a whole and will improve our ability to oversee activity holistically, ensuring future market stability and continued compliance with our regulatory obligations,” the bourse said.
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LME CEO Matthew Chamberlain has pointed to the lack of transparency in OTC positions as one reason the bourse struggled to identify and manage the situation.
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