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The UK financial regulator has fined the London Metal Exchange £9.2mn for having inadequate controls during a week of chaotic trading in the nickel market in 2022.
In a statement on Thursday, the Financial Conduct Authority said the LME did not have the “systems and controls” in place to ensure orderly trading as the nickel price surged between March 4 and March 8.
Its failure to do so had “undermined the orderliness of and confidence in LME’s market”, the FCA said, adding that its penalty was the first it had imposed on an investment exchange.
“London’s metal markets are of vital importance to the UK and global economy. We expect controls that match their significance,” said Steve Smart, FCA joint executive director of enforcement and market oversight, adding that the LME should have been “better prepared”.
The LME said on Thursday that it had implemented improvements to its controls since the episode, when the nickel price surged after a large bet on falling prices made by Chinese steel producer Tsingshan coincided with market concerns about sanctions against Russia, a top exporter of the metal.
“Since March 2022, significant work by both the LME and the FCA has materially reduced the risks of such an event from occurring again,” the LME said.
This is a developing story