Modern markets produce few unsolved mysteries. But the one left behind by the 2022 nickel crisis is a fairly decent one. What was really going on as the LME took the extraordinary decision to cancel US$12 billion in trades, rescuing one side of the market and wiping out some very large profits on the other?
News reports at the time gave us a few pieces of the puzzle. Then came a judicial review from US activist investor Elliott. A report by Britain’s market regulator last March dropped some chunky breadcrumbs. Other traders meanwhile tried, but failed to get hold of what was said in some of the crucial meetings.
Now Elliott is back. After losing a fight at London’s civil and appeals courts over the LME’s decision to cancel the trades, the hedge fund has opened a different legal door. It says the LME abused its dominant position in the run-up to the crisis by failing to keep the nickel market orderly as prices spiralled.
It is a conceptual leap, but one the Competition Appeal Tribunal found “novel” but plausible enough to allow Elliott to serve its claim on HKEX. It is the first time LME’s Hong Kong parent has become a defendant.
Crucially, Elliott alleges that HKEX exercised “decisive influence” over the LME, putting the relationship between the exchange and its Hong Kong parent squarely in issue.
It is a development HKEX is unlikely to relish, particularly given the spikier part of Elliott’s competition case: that the LME and HKEX failed to properly identify or manage conflicts between their own interests and those of the market. The result, Elliott says, was to favour the shorts over the longs.
That question has always had an added sensitivity because the biggest beneficiaries of the cancelled trades were Chinese. Tsingshan Holding Group, the Chinese metals giant controlled by Xiang Guangda, had amassed a huge short position in nickel. As prices rocketed, Tsingshan faced enormous margin calls. The squeeze was also causing trouble for CCBI Global Markets, a unit of state-owned China Construction Bank and one of Tsingshan’s brokers, which missed hundreds of millions of dollars of margin payments.
The LME gave CCBI more time to pay, before suspending the market on March 8 and cancelling some US$12 billion worth of trades. That rescued Tsingshan from having to settle those trades, while wiping out profits for traders on the other side, including Elliott. The LME did not reopen the nickel market until Tsingshan had reached a standstill agreement with its banks.
None of that establishes that Chinese interests influenced the LME’s decisions. But it makes what was happening inside HKEX, and what passed between Hong Kong and London, more interesting.
The Financial Conduct Authority (FCA) report into the nickel crisis, published after Elliott’s failed judicial review, gives the investor some ammunition here. The picture it paints is of an operation that was, at times, remarkably shambolic: senior managers struggling to work out what was happening, information not being shared properly and no clear picture of the risks building in the market.
Yet the LME was also talking to its members and relying on what they were telling it to understand those risks. Some were explicitly lobbying for the remedy the LME ultimately adopted.
One reading is that the LME was sensibly gathering intelligence from the market. Another is that interested parties had a ready route into the people deciding what to do next.
But there are some conspicuous blanks in the report. The members and LME senior management are not named and HKEX barely features. There is no mention, for example, of LME Clear chief Adrian Farnham turning to HKEX boss Nicolas Aguzin for help with China Construction Bank after its CCBI unit failed to meet a margin call.
Bloomberg reported that on March 7, Adrian Farnham, CEO of LME Clear, sent a WhatsApp message to HKEX CEO Nicolas Aguzin asking him to try to speak to China Construction Bank, because, in Farnham’s words, they couldn’t really allow CCBI “to not pay again.”
One WhatsApp exchange invites the question of what else is sitting in the files. If the competition case gets as far as disclosure, there may be emails, messages and internal exchanges that have never seen the light of day.
Whether any of this gets Elliott US$456 million it seeks in lost profits from the nickel crisis is another matter. But if the case prises out a few more pieces of what happened between London and Hong Kong in those crucial hours, it will already have done something useful. Four years on, there are still some rather good gaps to fill.
Copyright of Jane Moir, 2026