Hedge funds sue HKEX’s London Metal Exchange for US$96 million over 2022 nickel trading fiasco

The new lawsuit in London follows earlier demand from investors including Paul Singer’s Elliott Associates for damages tied to cancelled nickel contracts

The LME and its clearing house, both owned by HKEX, view the claims as without merit, saying the decision was made in the interests of the market

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Traders, brokers and clerks on the trading floor of the open outcry pit at the London Metal Exchange Ltd. (LME) in London on Monday, February 28, 2022. Photo: Bloomberg

Published: 11:14am, 7 Mar 2023Updated: 5:14pm, 7 Mar 2023

The London Metal Exchange (LME), a unit of Hong Kong Exchanges and Clearing Limited (HKEX), has been hit by another lawsuit by global hedge funds and commodity traders, a year after a nickel squeeze sparked wild prices and prompted the bourse to cancel trading contracts.

AQR Capital Management, DRW Commodities, Flow Traders, Capstone Investment Advisors and Winton Capital Management are seeking about £80 million (US$96.2 million) in damages from LME and LME Clear, according to a stock exchange filing on late Monday.

The lawsuit was filed in the English Commercial Court on Monday, according to HKEX. Both defendants are wholly-owned units of the Hong Kong stock exchange operator.

“The claim seeks damages for losses alleged to have been suffered as a result of the LME’s decision to cancel the claimants’ alleged trades in nickel contracts” executed on or after March 8, 2022, HKEX said. “The LME and LME Clear management are of the view that the claim is without merit.”

The new claim did not raise any new issues from existing cases against the LME and LME Clear announced in June last year, said the HKEX, which bought the LME in a HK$16.6 billion takeover in 2012. As such, the parties have agreed to a stay of claim pending the final determination of a judicial review of its decision to halt nickel trading and invalidate affected contracts, it added.