Money talks, and in the world of hedge funds, it speaks volumes. A year after suffering significant nickel losses due to unexpected changes in London Metal Exchange regulations, these savvy investors are pursuing compensation from the LME like a pack of wolves on the hunt. In this blog post, we’ll explore how these hedge funds are fighting back against their perceived injustice and what it could mean for the future of commodity trading.”

The LME’s decision to change nickel’s warehouse rules

In 2016, the London Metal Exchange (LME) made changes to its nickel warehouse rules that resulted in significant losses for hedge funds that were betting on the metal. The LME has since come under pressure to compensate these funds, but has so far refused to do so.

The LME changed its nickel warehouse rules in response to a glut of the metal that had built up in its warehouses. The new rules allowed for the release of large amounts of nickel into the market, which caused prices to plunge. Hedge funds that were long on nickel lost millions of dollars as a result.

The LME has come under pressure from some of these hedge funds to compensate them for their losses. However, the LME has so far refused to do so, arguing that the changes to the warehouse rules were made in response to a change in market conditions and were not intended to cause financial harm to anyone.

Some hedge fund managers have threatened legal action against the LME if they are not compensated for their losses. It remains to be seen whether any such action will be successful.

How the new rules led to losses for hedge funds

In 2015, the London Metal Exchange (LME) implemented new rules that allowed for the introduction of nickel contracts with a higher level of liquidity. The change was designed to attract more investment into the metal, but it had the unintended consequence of leading to losses for some hedge funds.

The new rules meant that there was less need for storage of physical metal, as investors could now trade on the LME without having to take delivery of the metal. This led to a sharp increase in price volatility, and some hedge funds were caught on the wrong side of the market.

The LME has since compensated some of these hedge funds, but many are still pursuing legal action in order to recoup their losses. The case is ongoing, but it highlights the risk that comes with investing in commodities.

The legal options available to the hedge funds

Hedge funds that were burned by the London Metal Exchange’s (LME) decision to change its nickel contract last year are pursuing legal action to recoup their losses.

The LME changed the size and price of its nickel contract in March 2017, a move that caught many market participants off guard and led to widespread losses. Some hedge funds were left holding positions that were “under water” – meaning they owed money to the LME – after the change.

Now, a year later, some of those hedge funds are still trying to get compensated for their losses. They have hired lawyers and are exploring their options, which include filing a lawsuit against the LME.

The LME has defended its decision to change the nickel contract, saying it was necessary to protect the integrity of the market. But the hedge funds argue that the exchange failed to properly notify market participants of the changes and misled them about the risks involved.

The legal options available to the hedge funds are: 1) filing a lawsuit against the LME; 2) arbitration; 3) mediation; or 4) negotiating directly with the LME. Each option has its own pros and cons, which should be carefully considered before taking any action.

1) Filing a Lawsuit Against The LME: This option would allow the hedge fund to have their day in court and potentially receive compensation for their losses if they are successful. However, it is also expensive and time-consuming, and

The likely outcome of the case

When the London Metal Exchange (LME) launched its new nickel contract in May 2018, hedge funds were quick to pile in, betting that prices for the metal would rise.

But within weeks, the nickel market had turned sharply against them, and by the end of June, some hedge fund managers had lost millions of dollars.

Now, a year later, a number of those same hedge funds are still pursuing legal action against the LME, seeking compensation for their losses.

The case is currently making its way through the UK courts, and a decision is expected later this year.

Based on the arguments presented so far, it seems likely that the hedge funds will be unsuccessful in their claim against the LME.

Conclusion

Hedge funds have been pursuing compensation from the London Metal Exchange (LME) for losses incurred in nickel trading a year ago. Although some progress has been made on the legal front, no tangible results have yet to be seen. While this situation is still unfolding, traders should be aware of their rights and understand that obtaining financial compensation for losses due to market manipulation could prove difficult depending on the individual case. This serves as an important reminder to always remain vigilant when it comes to trading activities and pay close attention to news developments related to markets such as LME.