Oliver Wyman has been selected by the London Metal Exchange to lead the exchange’s independent review of how it handled the nickel crisis that saw the exchange hit some $ 4bn in trades. The consulting firm, together with its partner Nera, will examine the events that culminated on March 8, when a dramatic spike in nickel prices caused the LME to stop trading and cancel trades.

Hedge fund Elliott Associates and market maker Jane Street have filed separate lawsuits over the millions they lost on right-of-way nickel bets. The LME has previously told Financial News that it will defend any litigation “vigorously”.
The scope of the review shall include current market conditions, the current market structure of the LME and trading rules, such as position limits and circuit breakers.

However, the decision-making process and governance arrangements between the exchange and its clearing house, LME Clear, will not be the subject of the independent review. These are already included in the scope of reviews carried out by the Financial Conduct Authority and the Bank of England. He also said the review will take until at least December, after which there will be a final report. As part of the review, Oliver Wyman will launch “extensive” outreach to market participants.