Elliott Associates is contemplating further action against the London Metal Exchange (LME) following a recent fine imposed on the exchange by a regulatory body for its handling of nickel prices three years ago. The U.S.-based hedge fund previously lost a lawsuit against the LME, which had canceled billions of dollars in nickel trades after prices surged to over $100,000 a tonne in March 2022, leading to a suspension of nickel trading.
In an emailed statement, Elliott expressed that it feels vindicated after the Financial Conduct Authority (FCA) fined the LME £9.2 million, marking the first enforcement action taken against a UK exchange. Elliott emphasized that the FCA's Final Notice confirmed its stance, stating, "The LME's failures caused material financial harm to many investors, including Elliott."
Elliott is currently reviewing the FCA's Final Notice and considering potential further actions, though it did not provide specifics on what those might entail.
In October, Elliott faced a dismissal of its lawsuit against the LME concerning the canceled nickel trades, which the judges determined were crucial for the stability of the overall market. In January, the court declined to grant Elliott permission to appeal, citing the absence of a "tenable point of law."
The FCA found the LME responsible for multiple shortcomings in addressing significant market stress, notably having only junior staff on duty during the early hours of March 8, 2022, when nickel prices skyrocketed.
The 148-year-old LME, owned by Hong Kong Exchanges and Clearing Ltd., accepted the findings of the FCA. Elliott remarked, "Unfortunately, beyond vindicating the position taken by Elliott, the FCA’s Final Notice does not address the harm caused."