ββ#ForexChief #LME #ElliottManagement #forexnews #stocks #worldnews #exchange #trading β
π₯ Tale of how the exchange Β«savedΒ» clients
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London Metal Exchange won a scandalous lawsuit to cancel open trades in nickel. The process ended last week, but the market Β«echoΒ» from its decisions will ring for a long time.
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Let us remind you: on March 8, 2022, due to the introduction of anti-Russian sanctions, the price of the basic three-month nickel futures contract increased 3.5 times over two sessions and exceeded $100 thousand per ton. The LME was forced to make tough decisions quickly to save the broader market from collapse as most clients would default on margin requirements.
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Transactions with a total volume of about $3.9 billion made on that day were cancelled. This, of course, did not please speculators who risked trading on market uncertainty. Only a week later, the exchange resumed trading and set a standard daily limit for nickel price fluctuations of 5% (currently β15%).
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Now the price of nickel on the LME is about $16 thousand per ton.
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The exchange was opposed by the hedge fund Elliott Management and the American brokerage company Jane Street, which announced losses of $456 million and $15 million, respectively. Despite public discussion of the situation and an official investigation, the High Court of London rejected the plaintiffs' arguments and stated that the real decision to block and cancel the financial result was made only by the exchange. And no one can influence this decision. LME is not required to pay any compensation.
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This lawsuit has set a dangerous precedent that gives exchanges unprecedented rights. Your risk management system must take into account that in any force majeure situation, protecting the interests of the exchange has absolute priority over the potential losses of the client. You will have to protect your money yourself.
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Nothing personal, it's just business.
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Profits to yβall!