City broker Britannia Global Markets cancels LME membership following March nickel price fiasco
Derivatives broker Britannia Global Markets has said it is giving up its membership to the London Metal Exchange (LME), after the London market halted nickel trading in March in response to surging prices.
Britannia said it had decided to cancel its Category 2 membership to the LME, which allows it to trade on behalf of itself and others.
The exit comes after LME halted nickel trading and cancelled trades, after nickel prices jumped 250 per cent last March to heights of $100,000 (£80,000) per tonne, following Russia’s invasion of Ukraine.
The metals exchange has since faced major backlash over its March decision, which has seen it subject to two separate lawsuits, from Wall Street giants Jane Capital and Elliot Management, in the previous week.
Yesterday, the Managed Funds Association (MFA), the hedge funds’ industry’s powerful Washington lobby group, also hit out at the LME, as it accused the exchange of failing to manage conflicts of interest.
The claims come after the LME halted trading as surging prices threatened to wreck a bet made by Chinese billionaire Xiang Guangda, that nickel prices would fall.
Britainnia said it now plans to update its metals trading offerings, with a view to focusing on “over-the-counter” (OTC) contracts, that are arranged between two counterparties with minimal intermediation.
The brokerage said it will also continue providing “solutions for cleared trades via strategic partnerships” with one of just more than ten Tier 1 clearers.
There are currently just more than 30 category 2 members of the LME.
Britannia chief executive Mark Bruce said: “The current market uncertainty following the well-publicised recent events, coupled with a clear hesitancy of some participants to support the existing LME market structure has led to a change in our strategic approach, without any loss of commitment by us, to the metals trading business.”