WATCHDOG PROBES LME OVER £3BN NICKEL DEBACLE

THE City watchdog has launched an investigation into the London Metal Exchange (LME) after it froze £3.3bn worth of trades and shut the nickel market for over a week last March.

The Financial Conduct Authority said its probe would include monitoring the LME’s efforts to improve its conduct, controls and governance. It will dig into the controls in place at the world’s oldest and largest metals market, between the start of last year and March 8, when it paused trades in response to surging prices.

Prices were up 250pc in just two days to a record high at over $100,000 a tonne before the LME stepped in.

That caused a major backlash, leading to investor lawsuits from Elliott and Jane Street – and leaving the industry without an effective global reference price.

LME said it ‘will co-operate fully’. There is no limit on the amount the watchdog can fine it, meaning that it may face a hefty charge. The probe is likely to take several years.

Separately, the Bank of England will name an independent monitor for the LME, after its own review.