Commodities, Finance, News, Nickel

Nickel trading halted again amid LME price glitch

nickel trading

The London Metal Exchange (LME) was forced to suspend nickel trading again after an IT glitch saw a handful of trades executed below the daily price limit.

The LME resumed nickel trading on Wednesday, and in doing so, installed 5 per cent upper and lower daily price limits to maintain trading stability.

This was designed to ensure the LME price couldn’t waver more than 5 per cent above or below the previous business day’s closing price for the relevant contract.

However, soon after the resumption, things went pear-shaped and nickel trading would be halted again.

“As the market opened, the uncrossing algorithm discovered an opening price of $US45,590 ($62,284) for three-month nickel. Unfortunately, due to a systems error, LMEselect then allowed a small number of trades to be executed below this lower daily price limit,” the LME said in a statement.

The opening price of $US45,590 was the lower daily price limit (i.e. 5 per cent below) of the three-month price posted in the LME’s ‘22/067’ announcement on Tuesday.

The LME said despite suspending nickel trading on LMEselect, nickel continued to trade on the inter-office and ring execution venues.

Following the IT glitch, the LME reopened nickel trading six hours after the initial resumption, with the original 5 per cent upper and lower daily limits in place. Trading proceeded successfully until close.

For the resumption of nickel trading on Thursday March 17, the LME announced the daily upper and lower limits would increase from 5 per cent to 8 per cent.

This considered the previous day’s pricing activity and was designed to “further assist the market discover the true market price”.

The LME first enforced the nickel trading halt on Tuesday March 8 after prices momentarily raced beyond $US100,000 ($136,619) per tonne.

It came as commodity prices surged across the board as the world imposed economic sanctions on Russia in response to its invasion of Ukraine.

Copper, aluminium and coal prices jumped to record highs, while gold and iron ore prices have also been on the up.

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