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IMF Says LME Needs Stronger Governance After Nickel Fiasco

  • IMF pointed to nickel market chaos as lesson for policy makers
  • Regulatory bodies are starting to weigh commodity market risks
Traders, brokers and clerks on the trading floor of the open outcry pit at the London Metal Exchange in London, U.K.

Traders, brokers and clerks on the trading floor of the open outcry pit at the London Metal Exchange in London, U.K.

Photographer: Chris J. Ratcliffe/Bloomberg
Updated on

The International Monetary Fund said the London Metal Exchange’s governance systems need to be strengthened after a massive short squeeze that left the world’s main nickel market suspended for six days last month and billions of dollars of trades canceled.

The LME has been criticized by investors for its handling of the crisis, when prices surged by 250% in less than two days in a squeeze centered around Chinese nickel and stainless steel producer Tsingshan Holding Group Co. The IMF highlighted the nickel-market chaos as part of wider risks in commodity markets and lessons for policy makers in the wake of recent extreme volatility.