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The
legal action piles more pressure on the exchange, which is being
probed by regulators and is struggling to restore trust and
volumes in its nickel market.
Elliott said the LME should not have halted trading and erased
deals after prices more than doubled to over $100,000 a tonne in
a matter of hours on March 8.
The LME and LME Clear Limited were named as defendants in the
judicial review claim filed in a British court by Elliott
Associates and Elliott International last week, the LME's parent
company Hong Kong Exchanges and Clearing Ltd said.
An Elliott spokesperson said in an email that the LME had acted
"unreasonably and irrationally in particular by taking into
account irrelevant factors, including its own financial
position".
The LME, the world's largest and oldest market for industrial
metals, said it had to take action to protect the market as a
whole when trading became disorderly.
In a statement, the exchange said it had "an important role to
play in ensuring the market is fair and orderly for all those
who wish to participate".
It added that the nickel market had become disorderly, and that
it had cancelled deals from midnight to 0815 GMT on March 8 in
an attempt to return the market to the time when it had last
been orderly.
"The LME therefore considers that Elliott’s grounds for
complaint are without merit, and the LME will defend any
judicial review proceedings vigorously.”
LME SUED NEARLY A DECADE AGO
Elliott Management, founded and co-led by billionaire Paul
Singer, is known for activist investing. The Elliott
spokesperson did not say in the email what LME nickel positions
it had when deals were cancelled.
The last time the LME was sued was nearly a decade ago when
Russian aluminium giant Rusal sought to derail proposed LME
reforms aimed at easing huge backlogs to withdraw metal from its
global warehousing network.
The LME initially lost the case, but won an appeal https://reut.rs/38VK3bK
allowing it to go forward and implement the reforms.
Last month, the LME proposed measures that it said would improve
transparency and stability in the over-the-counter (OTC) metals
market, including more frequent disclosures of all positions.
HKEX shares closed up 1.6%, underperforming the broader market
index, which gained 2.7%.
(Reporting by Selena Li and Eric Onstad; Editing by Florence
Tan, Kim Coghill, Kenneth Maxwell and Jan Harvey)
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