
The London Metal Exchange (LME) and the Shanghai Futures Exchange (SHFE) are hinting at potential cooperation following criticism of the LME's handling of a market crisis. At the CRU World Copper Conference Asia, Zhang Bizhen, managing director of Minmetals Futures Co, highlighted shortcomings in the LME's risk control systems, referring to the nickel short selling in 2022 that led to a major trading halt and billions of dollars in canceled transactions.
Zhang did not hold back in his criticism, suggesting that the LME should consider adopting some of the strategies implemented by SHFE to enhance investor safety. The comment comes after a turbulent period for the LME, which faced intense scrutiny following an unprecedented surge in nickel prices in March 2022. This volatility was so extreme that it caused the exchange to suspend trading and cancel a number of transactions, which later sparked controversy among market participants.
In response to Zhang's comments, Robin Martin, the LME's head of market development, acknowledged that their relationship with the SHFE is complementary. Despite difficulties in the past, both exchanges look forward to working together, he said. Martin's hint of future cooperation suggests that the LME is open to learning from SHFE's approach to risk management and integrating some of its practices to prevent similar incidents from happening.
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