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Update on LME Lawsuits

The London Metal Exchange (LME) is getting ready for the court case brought by two financial institutions over the cancellation of billions of dollars’ worth of nickel trades.

The case, which could impact the reputation of London as a financial center, stems from the LME's decision to annul around $12 billion in nickel deals in March last year due to a record-breaking surge in prices.

Hedge fund Elliott Associates and market maker Jane Street Global Trading are collectively suing the LME for $472 million, alleging that the exchange failed in its responsibilities.

The LME argues that it had the authority to close the market and cancel trades to prevent bankruptcy and systemic market risk.

The trial will span three days, and if the LME is found at fault, a second trial would determine compensation. The outcome of the case will also address the issue of when a financial exchange has the right to void legitimately placed trades.

Reuters has published a thorough breakdown of the case here.

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