Why the London Metal Exchange cancelled a full day of nickel trades
When a massive short squeeze threatened to bankrupt members of the London Metal Exchange, the institution took the unprecedented step of halting the market and cancelling an entire day of trades. This video examines the fallout of that decision and the events surrounding a Chinese tycoon's failed bet.
In a move described as one of the most controversial in its 145-year history, the London Metal Exchange (LME) intervened in the nickel market following a price surge that nearly doubled the metal's value. The volatility was partially triggered by Russia's invasion of Ukraine, creating a crisis for Xiang Guangda, the tycoon behind Tsingshan Holding. His large bearish position backfired, leaving him unable to meet margin calls.
The LME justified its decision to cancel trades by arguing that forcing settlement would have caused the bankruptcy of smaller exchange members. The exchange maintained that this intervention was necessary for the stability of the market as a whole, despite the fundamental trading principle that commitments should be honored regardless of market conditions.
