Jane Street, one of the world’s biggest market-makers, has sued the London Metal Exchange, as international groups ratchet up pressure on the exchange over its decision to cancel a day’s worth of Nickel trades in March.
Jane Street filed the case against the LME and its clearing house on Wednesday, seeking $15.34mn, LME owner Hong Kong Exchanges and Clearing said on Tuesday.
The move follows a $456mn claim made by US activist group Elliott Management, which was revealed by HKEX a day earlier.
The legal action heaps further pressure on the 145-year-old exchange, which is battling to repair its reputation as UK financial regulators examine its handling of the crisis.
The decision to suspend trading on March 8 came after nickel surged as much as 250 per cent in just two days to trade briefly above $100,000 a tonne. The price spike was triggered by a short squeeze as banks and brokers rushed to close part of a large position amassed by Xiang Guangda, the billionaire founder of China’s leading stainless steel producer Tsingshan Holding Group.
International funds including AQR, one of the world’s largest hedge funds, have accused the LME of cronyism over the decision, leading the LME to deny that parent company HKEX influenced it.
The LME will contest the claim “vigorously” and views it as “without merit”, HKEX said.
“The LME’s arbitrary decision to cancel nickel trades during a period of heightened volatility severely undermines the integrity of the markets and sets a dangerous precedent that calls future contracts into question,” Jane Street said in a statement, adding that it had taken action to “recoup is losses” caused by the decision.
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