LME Violates Number One Cardinal Rule: Never Cancel Trades

Nickel futures remain suspended after a Chinese producer could not come up with an $8 billion margin call. What's going on?



LME Cancels Nickel Trades, Image from Tweet on Nickel

Nickel Trades Still Suspended 

On March 8, I noted Nickel Market Breaks, Price Doubles to $100,000 In 1 Day, Deliveries Fail

After "Big Shot" did not meet margin calls, the LME cancelled trades.

Nickel Market Freeze Extended to Sort Out Big Trading Loss Amid Ukraine War

The Wall Street Journal reports Nickel Market Freeze Extended to Sort Out Big Trading Loss Amid Ukraine War

London’s nickel market will stay closed at least until next week, giving the London Metal Exchange more time to resolve a crisis caused by a huge loss-making trade originating in China.

The LME paused trading in nickel Tuesday, the first time it had suspended a market since 1985, and canceled trades executed before the suspension. The exchange late Thursday extended the freeze through the end of the week.

One question for the market before it reopens: What will be the price of nickel when it does? Most traders think the supply and demand of nickel don’t justify Tuesday’s record high of over $100,000 a metric ton. But some say the market moved in such a wide range before the suspension that it is hard to know where it will open.

“In an environment where we’re just exiting the pandemic, there’s a shortage of material and the Russians just invaded Ukraine, there were literally no offers in the market,” said Guy Wolf, head of market analytics at Marex, a member of the LME’s storied open-outcry ring. “Forced buyers, no sellers: Prices can go anywhere.”

“The number-one rule is never, ever cancel trades,” said Don Wilson, chief executive of Chicago-based trading firm DRW, which trades on the LME and had a position in nickel canceled. “Every other exchange in the universe gets that.”

Big Shot Wants to Keep Shorting 

More Bianco Comments

Regarding Point 4 and 5 on Government Confiscation:

Bianco: "But understand we have crossed a Rubicon in the last few months that financial institutions and Govts can take money because they do not like that person or their activities."

Unprecedented Fed Action May Have Just Started a Global Currency Crisis

Jim Bianco is talking about what I discussed in Unprecedented Fed Action May Have Just Started a Global Currency Crisis

Unprecedented Action

The Fed, likely acting on orders from the Biden administration, froze the US dollar reserve assets of Russia.

Some may cheer this others not, but perhaps by the time I finish this post, those cheering now may have second thoughts. 

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