It has been a week of dismay for the London Metal Exchange. A major hedge fund association files a complaint only days after it was sued by two investors.
The Managed Funds Association (MFA) – a trade body representing over 140 member firms with nearly $1.6 trillion in assets under management – is the latest to call out the HKEX-owned London Metal Exchange (LME) over its suspension of the nickel market and related trade cancellations in March.
«The LME has undermined confidence in its ability to oversee markets by failing to perform its regulatory obligations to maintain an orderly market, manage conflicts of interest and protect investors in the nickel market,» MFA said in a statement.
«As an important provider of liquidity in the metal markets, the alternative asset management industry encourages the LME to take swift action to redress these regulatory shortcomings.»
LME Review
Meanwhile, LME is commissioning its own review with the goal of minimizing risk and preventing future market disorder, though no details have been disclosed on when it will begin or conclude
On this matter, MFA highlighted that the scope of the review did not address the key issue of the relationship between the commodities bourse and the clearing house it owns.
«We note as a preliminary matter that the suggested scope of the independent review […] does not address some of the points we make in our [complaint], including the proper relationship between LME and LME Clear,» MFA explained.
Piling Pressure
The MFA complaint follows legal action by two U.S. investors earlier this week.
Jane Street Global Trading sued LME for $15.3 million over canceled nickel trades days after Elliott Associates did the same for $456 million.
