The London Metal Exchange faces the prospect of hefty fines and censure after the UK’s top financial regulator launched an enforcement investigation into the company over the decision to freeze billions of dollars’ worth of nickel trades during last year’s market mayhem.
The Financial Conduct Authority said the probe, the first such action it has launched against an exchange, would include actively monitoring the LME’s efforts to improve its conduct, controls and governance.
The investigation will also examine the conduct, systems and controls in place at the LME between the start of 2022 and March 8, when it froze nickel trades in response to skyrocketing prices. The investigation is likely to take several years and could result in a fine for the LME.