by Cu Penny Hoarder » Wed Mar 16, 2022 7:06 am
What a shit-show! I predict LME prices will eventually become irrelevant.
------------------------------------------------------------------------
LME Re-Opens Nickel Trading; Quickly Halts Again On Limit-Down Band "System Error"
Update (0650ET): “What a debacle,” said Ole Hansen, head of commodities strategy at Saxo Bank A/s. “The LME is not doing itself any favors.”
After reopening the LME for nickel trading this morning, following the bailout of Chinese commodity tycoon Xiang Guangda, the Chinese-owned (HKEX) exchange for forced to suspend trading soon after the open due to a "system error" which had led to some trades to be executed below the new price limits laid out by the exchange.
As Bloomberg reports, only 206 lots, or 1,236 tons of nickel, changed hands before the market stopped trading within seconds on Wednesday morning. Most of those trades took place at the limit price of $45,590 a ton. Several trades appeared to be at prices below the 5% limit.
“In some sense it went as expected, in that we all expected it to fall, but it was just a question of how quickly,” Colin Hamilton, managing director for commodities research at BMO Capital Markets, said by phone from London.
The LME introduced price limits before reopening today to prevent a repeat of the chaos last Tuesday, when it suspended trading as prices roared to record highs above $100,000 a tonne. In a statement the exchange said:
“As the market opened, the uncrossing algorithm discovered an opening price of $45,590 (which was the lower daily price limit, i.e. 5% below the prices published in Notice 22/067) for 3-month Nickel.
“Unfortunately due to a systems error, LMEselect then allowed a small number of trades to be executed below this lower daily price limit.
“The LME immediately decided to suspend Nickel trading on LMEselect while the system error is investigated.”
The LME said that all nickel trades executed at the lower price on LMEselect, its trading system, would now be cancelled.
This 'cancellation' decision follows the highly controversial move from the LME to cancel $3.9bn worth of trades last Tuesday as the market surged.
Time is precious, stop wasting it.