Four big short position-holders and one financial player on the long side were at the core of the London Metal Exchange's (LME) nickel meltdown last March.
The clash of positioning is revealed in a report by independent consultancy Oliver Wyman, hired to review the events in the nickel market leading up to the LME'swide range of recommendations
The exchange "has been considering, and will continue to consider, what further steps may be appropriate in terms of its investigatory and/or disciplinary powers," it added.
"Two positions in particular, both with significant OTC components, were large in relation to the financial resources of their owners," the report said. Collapsing liquidity meant that shorts managed to cover only 1,400 lots of exposure by the time trading was suspended at 0815 local time, compared with 11,500 lots the preceding day.The shorts were not helped by the rapid build-up of a long position on March 7 which the report links to "one financial client with no material existing nickel position".
However, the report makes clear that one of the root causes of the blow-up was the fragmentation of positions across counterparties and between exchange and OTC markets.
France Dernières Nouvelles, France Actualités
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