LME To Delay Over The Counter Trade Reporting Requirements Until September 5

LME To Delay Over The Counter Trade Reporting Requirements Until September 5

The London Metal Exchange said last week it will be delaying its requirement that its members report over the counter (OTC) trades of aluminium and other metals by seven weeks in order that data on those trades is reported correctly.

The LME made the announcement on Friday regarding the controversial move, which it will delay from July 18 to September 5. The initial impetus for the reporting requirement was an unforeseen spike in nickel prices in March that the LME blames on OTC trades.

Delaying the new requirement was done at least in part due to member concerns said the LME in a statement released on the matter.

“The LME has been in dialogue with a number of members and other interested parties who have raised concerns regarding the ability of members to meet the implementation date for the proposals.”

The Exchange announced the new rule on June 17, which would have the member traders report OTC trades on every metal that is delivered physically to them. OTC trades of aluminium, nickel, and copper are among the metal commodities that would require reporting under the new rule.

On March 8 the LME suspended trading of nickel and cancelled the deals then in progress due to a significant number of short positions on the metal that sent the price skyward. Prices per metric ton topped out at US$100,000 on expectations that Tsingshan Holding Group and other metals firms would be bound to buy back the short positions on nickel.

The following month saw regulators in the United Kingdom launch an investigation on the situation. The LME also commissioned its own third-party investigation on the matter. Separately, American traders Elliott Associates launched a US$456 million lawsuit against the LME and Jane Street Global Trading filed its own US$15.3 million action, both to recoup losses they said they incurred on the cancelled nickel transactions.