UK Financial Regulators' Statement on Suspension of Nickel Trading on London Metal Exchange04/04/2022The U.K. Financial Conduct Authority, Prudential Regulation Authority and Bank of England have published a joint statement on the London Metal Exchange's suspension of nickel trading between March 8-16, 2022. Trading was suspended due to challenging commodity market conditions following Russia's invasion of Ukraine.
The FCA supervises the LME as a recognized investment exchange and the BoE supervises LME Clear as a central counterparty. After allowing for a period of stability, the regulators plan to undertake a series of actions in response to the suspension. The FCA will review the LME's approach to managing suspension and resumption of the nickel market; the BoE will review the operation of LME Clear to determine any lessons regarding its governance and risk management; and both regulators will then consider whether further steps should be taken in response to those reviews. The FCA and PRA will also engage with firms who held significant positions in the market to assess their risk management and governance.
Questions have been raised recently about the role of transparency in the LME and related markets and the FCA expects the LME to consider how the recent shock should shape its future approach.
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