The U.K.'s markets watchdog has launched an investigation into the London Metal Exchanges' handling of a nickel market crisis last year which led it to cancel billions of dollars worth of nickel trades after prices surged.
Concerns about Russia's invasion of Ukraine pushed nickel prices higher last March, inflicting sharp losses on nickel producer Tsingshan Holding Group Co, which held large short positions against the metal. In a self-fulfilling cycle of rising prices known as a short-squeeze, prices more than trebled in a single day as Tsingshan rushed to close their loss-making short positions.
The authority said its investigation would cover the period between January 1, 2022 and March 8, 2022, when the LME canceled nickel trades, but didn't provide any other details about its probe. The LME acknowledged the investigation and said it would cooperate fully and continue to take steps to strengthen the oversight and proper functioning of its markets. The LME also said it welcomes the Bank of England's move.