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AQR turns to UK judge in LME battle

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AQR Capital Management is among a group of hedge funds and other traders who have asked a British judge to force the London Metal Exchange to hand over phone transcripts and meeting notes about its decision to cancel nickel trades in March of this year, according to a report by Reuters.

AQR Capital Management is among a group of hedge funds and other traders who have asked a British judge to force the London Metal Exchange (LME) to hand over phone transcripts and meeting notes about its decision to cancel nickel trades in March of this year, according to a report by Reuters.

The LME cancelled trades worth billions of dollars on the back of a spike in the price of nickel which it said led to “significant losses” for market participants.

The report cites Paul McGrath, a lawyer for AQR-led group which also includes Winton Capital Management, Capstone Investment Advisors, Flow Traders and DRW Commodities, as saying it is difficult to understand why his clients can not have access to documents that would further explain the LME’s actions.

According to McGrath, the documents could help to ascertain whether the LME’s action were influenced by a relationship between billionaire Xiang Guangda and his Tsingshan Holding Group (THG) and LME owner, the Hong Kong Exchange.

THG, one of the world’s top nickel producers, faced massive losses on its short positions after prices soared to more than $100,000 per tonne on 8 March 8 and trading was halted.

The LME says it has already provided a 7,000-word explanation for its decision which James McClelland, a lawyer acting for the exchange has said chiefly to prevent a “Lehman-like event” in which many participants would face defaults, and to preserve market order.

The LME is also facing separate lawsuits from US hedge fund Elliott Associates and Jane Street Global Trading, which are suing the LME for $456 million and $15.3 million, respectively.

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