UK Financial Regulator Should Fine Itself for LME Fail
The 2022 nickel crisis could have cost $20 billion. The FCA still has questions to answer.
Eyeing nickel.
Photographer: BEN STANSALL/AFPAfter a 24-month-long investigation, the UK financial regulator on Thursday said it fined the London Metal Exchange £9.2 million ($11.9 million) for its failures during a massive short squeeze in the nickel market in 2022. This is the first time the regulator has sanctioned a London-based marketplace. But it feels like false closure.
The Financial Conduct Authority should now take the next step: investigate itself for its own role in the crisis — or let someone else do it. Reading the available documentation, it’s difficult to see how the FCA wouldn’t admit that it, too, was asleep at the wheel, and thus fine itself. Sure the information-collection system at the time wasn’t great, so the regulator couldn’t see all the risks. But its role goes beyond collecting hard data — asking questions, pressing and cajoling market participants is as important. The time when UK regulators just needed to raise an eyebrow is long gone.