The LME’s decision back in March to void nickel trades made over an eight hour period has prompted a number of hedge funds to reassess the portfolio risk of trading certain markets, according to a report by The Financial Times.
The LME’s decision back in March to void nickel trades made over an eight hour period has prompted a number of hedge funds to reassess the portfolio risk of trading certain markets, according to a report by The Financial Times.
Hedge funds have reportedly reduced positions in some markets as a result fearing that ‘human intervention’ may make them difficult to trade in.
THE LME’s decision came after the price of nickel soared by 250 per cent in just a couple of days, to $100,000 a tonne and was designed to halt a squeeze on a short seller and protect other market participants from big losses.
Rotterdam-based quantitative hedge fund Transtrend, and Paris-based quant firm Capital Fund Management, are among the funds reported to have stopped or reduced trading certain LME markets, while US hedge fund Elliott Management has sued the LME for more than $456 million, alleging that it “acted unlawfully”, while market maker Jane Street has filed a claim seeking $15.3 million. The Managed Funds Association has also made a formal complaint to the LME with UK regulators now reviewing the incident.
