Jane Street follows Elliott in suing LME over nickel trades

The action by the firm that’s known for its dominance in markets such as exchange-traded funds and corporate bonds follows a similar and larger claim by Elliott Investment Management, which is seeking $456 million from the LME.

The judicial review was filed by Jane Street Global Trading LLC in the English High Court and served on the LME and its clearinghouse on Monday, Hong Kong Exchanges & Clearing Ltd., the UK bourse’s owner, said in a statement. The claim is without merit and will be contested vigorously, it said.

The Hong Kong exchange revealed on Monday that two vehicles under Elliott Investment Management were also claiming damages from the LME. The UK exchange has been widely criticized for its handling of the nickel market crisis and is also facing a review by domestic regulators.

“The LME’s arbitrary decision to cancel nickel trades during a period of heightened volatility severely undermines the integrity of the markets and sets a dangerous precedent that calls future contracts into question,” Jane Street said in emailed comments. The trading firm “has undertaken this action to recoup its losses caused by the LME’s illegal actions and to strengthen the exchange and restore the market’s trust in it,” it said.

The LME suspended its nickel market on March 8 and controversially canceled $3.9 billion of trades after prices surged in a massive squeeze centered around a large short position held by nickel tycoon Xiang Guangda. While Xiang stands out as the big short, no single trader or investor on the other side has been credited, or blamed, for driving prices higher.

Hedge funds, drawn to nickel as a bet on the electric vehicle revolution and due to worries about interruptions to Russian supplies, were believed to be among the bulls. Collectively, investment funds lifted bullish bets on nickel to the highest on record on Feb. 18, the week before the invasion of Ukraine.