FCA slaps the London Metal Exchange with USD 11.9 million (£9.2 million) over 2022 nickel metal crisis

Britain's Financial Conduct Authority (FCA) has imposed a £9.2 million ($11.9 million) fine on the London Metal Exchange (LME) for failures in managing the 2022 nickel market crisis, marking the first-ever penalty against a UK exchange. The sanction follows an investigation that uncovered critical weaknesses in the LME's oversight during extreme price swings.

On March 8, 2022, nickel prices skyrocketed to over $100,000 per metric ton—more than doubling within hours. The FCA determined that only junior staff were on duty during the early morning surge, leaving senior management unaware as the situation spiraled out of control. The LME ultimately had to cancel $12 billion in trades, a controversial decision that triggered lawsuits from investors alleging heavy losses. While the exchange later prevailed in court, the episode exposed flaws in its risk controls.

Analysts have described the incident as a major misstep in exchange governance, pointing to inadequate crisis protocols, insufficient staff training, and delayed executive action. The turmoil was exacerbated by dwindling nickel inventories and the inability of large short-sellers, including China’s Tsingshan Holding Group, to cover their positions. The FCA criticized the LME for failing to anticipate and mitigate such risks.

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The LME, owned by Hong Kong Exchanges and Clearing, accepted the regulator’s findings and received a 30% reduction in the fine for cooperation. It acknowledged that spillover from over-the-counter (OTC) trading contributed to the chaos but noted that it lacked visibility into OTC positions at the time. The exchange has since strengthened its systems to improve market stability.