"Devil Nickel" has made a comeback! Unexpected failure of electronic trading system triggered by drop limit on the first day of resumption

At 16:00 Beijing time on March 16th, nickel futures on the London Metal Exchange reopened a week later. As expected by the market, a large number of orders instantly hit the futures price directly to the lower limit of the decline. Due to the new trading rules, nickel futures will be limited to rise or fall by 5% today.

* according to the latest news, LME issued a statement saying that the market reached the lower limit after the reopening of the market, and the market has been suspended to investigate potential technical problems with the lower limit. According to media reports, before LME halted electronic trading, only 206transactions (1236 tons) were completed after the opening of trading on Wednesday. Most of the mainstream three-month futures traded at the lower limit of US $45590 / ton, but some transactions were below the lower limit.

根据交易所公告，在发现LME select系统成交了低于限价的订单后立即宣布暂停电子系统交易，后续也将取消这些交易。目前交易所正在调查信息系统中存在的错误，并争取尽快恢复交易。具体开市消息将进一步通知。

As a price reference, last week's nickel futures rose nearly 7 per cent to 235200 yuan per tonne ($37000) on Wednesday afternoon, based on a 5 per cent decline limit. apart from today, it will take four more trading days to hit the decline limit to bring prices back down.

It is also very likely that Lunni futures will continue to fall. It is reported that there were 8600 orders hanging in the trading books at the beginning of trading today, while only three orders were bought.

It should be emphasized that in order to avoid market volatility, the London Metal Exchange has put in place a number of "curses" before resuming nickel futures trading, which is the main reason for today's lukewarm trading:

1. After the resumption of trading on Wednesday, the rise and fall of nickel futures is limited to 5%, while the rise and fall of other base metals is limited to 15%. The closing price of the day before the price fluctuation shall prevail.

2. Quotations that are higher or lower than the range of rise and fall will be rejected by the system, but the trading itself will continue; LME emphasizes that futures with different maturity dates also need to comply with their respective rise and fall limits when changing positions on a monthly basis.

(3) transactions shall not be conducted in any place outside the LMEselect, and the mandatory reporting threshold for nickel positions has been reduced from 6000 to 3000;

4. All nickel contracts with delivery dates between March 16 and March 22 signed before March 16 can be postponed to March 23 to ensure market price stability.

The London Metal Exchange said it will determine the price fluctuation range of nickel futures on subsequent trading days after the close of trading on the 16th, and it is expected that after market conditions are stable, nickel futures will also apply the 15% one-day rise and fall limit for other metal contracts.

Under the condition that the exchange does not adjust the rise and fall limit, the price of nickel futures can only fall by 26.5% at most before the next delivery day, and for nearly 20,000 contracts that are about to expire, the situation of changing positions and changing months will also be closely watched by the market.

Force the air to fight 2.0: Castle Peak Group reaches a silent agreement with the bank

In this historical market, although the "big long" has not surfaced, the biggest short has been identified as the Chinese industrial giant Qingshan Group.

In the early morning of March 15, Castle Peak Group also announced on its official Wechat official account that it had reached a silent agreement with a syndicate of futures bank creditors.

According to the agreement, during the quiet period, Castle Peak and the syndicate will actively negotiate the implementation of standby, guaranteed liquidity credit, mainly for Castle Peak's nickel position margin and settlement requirements. During the quiet period, the participating futures banks agreed not to liquidate positions in Castle Peak or to increase margin on existing positions. As an important part of the agreement, Castle Peak Group should reduce its existing positions in a reasonable and orderly manner with the elimination of abnormal market conditions.

According to a report by Bloomberg over the weekend, JPMorgan Chase, the world's largest bank, is the most exposed of Castle Peak's creditors, accounting for 1/3 of its overall exposure. Aoyama Holdings owes JPMorgan a margin of nearly $1 billion at Monday's closing price. But as nickel prices fall, so will their exposure.

Related reports:

"LME: suspends nickel trading again due to system error to evaluate whether to extend the rise and fall limit.

"Renni's rise and fall limit is set at 5% and will be evaluated at the end of trading on March 16.

Lenny returned to the market on the afternoon of March 16 and introduced a 5% limit on daily prices on the London Stock Exchange.

"LME all metals set limits on nickel trading will restore these information points to be known!

"[important] Futures prices fluctuate greatly. For enterprise settlement, please refer to SMM spot quotation!

Aoyama issued a big announcement in the middle of the night, followed by LME's announcement of the resumption of nickel contract trading.

"Nonferrous Association: the current nickel price seriously deviates from the fundamentals and loses its guiding significance to the spot price.

LME: announcement on Nickel position transfer and transaction costs

"LME: will resume nickel trading no earlier than Friday and set a daily limit of 10%.

European Iron and Steel Association: LME should continue to suspend nickel trading until prices are stable

"transaction fees for tin, nickel and stainless steel futures contracts adjusted in the previous period

"LME suspends trading in nickel contracts and considers multi-day suspension [LME announcement]

LME implements spot premium restriction and deferred delivery mechanism in view of the influence of the situation in Russia and Ukraine and the current situation of low metal inventory.

CGTN interview: soaring Nickel Price will not impact China's New Energy Automobile Industry