The London Metal Exchange said on March 14 that trading in its nickel contracts would resume at 0800 GMT on March 16, after being closed for a week after prices soared to $100,000 a tonne.
The LME said that it would apply daily 15% upper and lower price limits to all outright contracts in all base metals, with 5% limits for nickel. Trades outside the daily price limit will be classed as error trades and rejected. The exchange, which is owned by Hong Kong Exchanges and Clearing, also said it would introduce new “accountability levels”, meaning that the threshold limits for it to interrogate participants’ positions would be reduced from 6,000 lots to 3,000 lots and apply to so-called over-the-counter positions that aren’t conducted by the exchange. A lot generally constitutes 6 tonnes of metal.
The LME said that members would need to disclose, by 2000 GMT each business day until further notice, all over-the-counter positions in nickel greater than 100 lots. Where a member or a client has a position above the accountability level, or the LME otherwise deems it appropriate, the exchange would ask for an explanation for the position.
The LME said shortages of deliverable-grade nickel “could be capable of exacerbating situations such as the present one”. It said it would consider concepts like enhanced position limits, further transparency as to position-holders, and accepting a broader range of physical nickel grades.FILE PHOTO: Traders work on the floor of the London Metal Exchange in London, Britain, September 27, 2018.