LME nickel trading has just resumed and stopped urgently. LME announced the suspension of relevant contract transactions due to system reasons. After emergency repair, the nickel contract resumed trading after 2 pm local time. LME nickel trading has just resumed, and it was stopped urgently.
LME nickel trading has just resumed trading, and it was urgently stopped again at 1. A week later, London Metal Exchange (LME) originally planned to resume nickel futures trading on March 6th16th, Beijing time. However, LME said on the day of resumption of trading that "the nickel electronic disk will be suspended to investigate the possible technical problems of the upper limit of decline and will be updated as soon as possible".
From the perspective of the disk, the emergency stop is because the actual opening price is much lower than the middle price of the day, and the actual decline also exceeds the price limit of 5%. Many analysts told the Securities Daily reporter, "The main reason for this situation may be that there was no price limit during call auction, which led to a far cry from the opening price and the middle price."
The actual decline is as high as 8%
Since the suspension of nickel futures trading last week, LME has also made institutional adjustments to related transactions while negotiating with customers with multiple short positions. On March 15, LME announced that nickel trading was limited to 5%.
Many people in the industry have affirmed the setting of the upper limit of price increase and decrease, which can control the trading risk and prevent the 80% increase of the previous day from happening again. Fu, a researcher of non-ferrous metals in Huatai Futures, told reporters that, in contrast, the setting of the price limit system in the domestic futures market has better prevented and controlled market risks and reduced the possibility of forced liquidation or malicious price manipulation.
However, with the countdown to the resumption of trading, the LME three-month nickel contract failed to meet the expected smooth transaction, and finally deviated from the set price. After running for just over ten minutes, LME was forced to suspend nickel electronic trading again.
Judging from the disk, according to the 5% price limit set on the same day, 45,590 USD/ton should be the daily limit. However, LME3' s three-month nickel contract fell below this price to $43,995/ton at the opening, with an actual drop of 8%.
Analysts say the problem may be call auction. "LME only set the upper limit of trading time, but ignored the upper limit of trading time in call auction, which caused the opening price to be much lower than the middle price, resulting in the actual decline far exceeding the daily limit price."
Gu Fengda, director of Guo Xin Futures Research and Consulting Department, said that this dramatic event should be caused by LME's spot trading habits and system defects. For market participants, it should be recognized that LME is self-sufficient in dealing with market changes and sudden rule adjustments, and does not need to interfere too much with the hedging and fund management of enterprises' own risk exposure.
The advantages of domestic systems appear.
Many people in the industry believe that compared with the domestic futures market trading system, the restrictive advantages such as floor trading rules and delivery are more obvious.
Song, the account manager of the futures market department of China Research Institute, told this reporter that compared with setting the first-day increase of on-site trading as the upper limit of 5%, the domestic futures market daily limit system is more conducive to ensuring the normal operation of the futures market, stabilizing the order of the futures market and giving full play to the functions of the futures market.
Gu Fengda said that the price limit system announced by LME is an important measure to learn from China futures market. As a new measure, no more details were released. Whether LME will use the price limit system temporarily or for a long time may need to wait until the market changes ease. However, judging from the current situation, the prices of all LME metal contracts fluctuate sharply, so it is obvious that more regulatory measures and trading restrictions are needed to supervise futures prices that rise or fall by more than 40% in a single day, and it is not excluded to continue to use this system in the later period.
Xia Yingying, a metal analyst in nanhua futures, told reporters that from the perspective of stabilizing the market, the advantages of the price limit system undoubtedly outweigh the disadvantages. First, it can prevent the use of capital advantages, technological advantages, information deviation and other factors to control product prices, giving small and medium investors a certain time to adjust their positions; Second, the linkage of non-ferrous metal prices. The rise or fall of a single metal price is likely to lead to the joint effect of other metals, which is often irrational, and the price limit system can ensure that the overall price of non-ferrous metals is not affected as much as possible.
Xia Yingying further stated that the current LME nickel futures price fluctuates around 50,000 USD/ton, which is converted into domestic Shanghai nickel price of about 350,000 RMB/ton according to the no-arbitrage price. LME nickel futures price temporarily loses market liquidity, so the future LME nickel futures price will be anchored in Shanghai nickel futures price with a high probability, but Shanghai nickel price is around 230,000 RMB/ton, and the price difference between domestic and foreign markets is huge.
LME nickel trading has just resumed and stopped again. After six trading days, the London Metal Exchange (LME) nickel contract was re-traded at 8: 00 am local time on March 16. However, after a short trading time, LME announced the suspension of related contract trading due to system reasons. After emergency repair, the nickel contract resumed trading after 2 pm local time. As of press time, the main contract price of nickel is the price limit, 45,590 USD/ton.
Figure: LME announcement
Nickel contract reopened
LME nickel futures resumed trading at 8:00 local time on March 6/kloc-0 (Beijing time: 16: 00). The benchmark opening price was the closing price on March 7th, namely $50,300/ton, which hit a 5% price limit of $45,590/ton at the opening. But then, LME suspended trading. According to the announcement issued by LME, the transaction price of a small number of contracts was lower than the price limit due to system setup problems, so LME decided to suspend the nickel trading selected by LME during the investigation of it system errors.
All nickel transactions executed at the daily limit price on LME Select will remain unchanged, and a small number of nickel transactions below the daily limit price will be cancelled.
In addition, over-the-counter transactions and on-site transactions conducted by telephone inquiry are carried out as usual. LME also said that IT will continue to investigate IT system errors and update market information in a timely manner in order to reopen LME's selected nickel market.
LME reopened the nickel contract trading at 0/4: 00 local time (22: 00 Beijing time). As of press time, the price remained at the price limit of 5%.
Review of "Devil Nickel" Event
On March 8, after LME opened, the nickel contract soared from $50,000 per ton to more than $654.38 million. Subsequently, LME announced the suspension of nickel trading, and announced that the day's trading was invalid because of the systemic risk brought by the skyrocketing nickel price. Subsequently, the market rumors that China Qingshan Holding Group, which holds a large number of short positions, is buying heavily to reduce short positions.
/kloc-In the early morning of March 0/5, the official account of Qingshan WeChat of Qingshan Industry issued a statement saying that Qingshan Group had reached a silence agreement with a syndicate of creditors of futures banks. During the silent period, Qingshan and the syndicate will actively negotiate to implement standby and guaranteed liquidity credit, which is mainly used for the nickel position margin and settlement requirements of Qingshan.
During the silent period, the participating futures banks agreed not to open positions in Qingshan, or requested additional margin for existing positions. As an important part of the agreement, Qingshan Group should reduce its existing positions in a reasonable and orderly manner with the elimination of abnormal market conditions.
Qingshan Group and the consortium reached a silence agreement. LME said: "LME has been actively cooperating with stakeholders to evaluate the current market conditions and the conditions for resuming the transaction. A big customer in the market has now announced the relevant details of supporting the banking consortium, which may indicate that the possibility of further chaos may be alleviated. "
On March 15, LME announced that the nickel contract would resume trading on March 16, but the price increase or decrease was limited to 5%.
LME nickel trading has just resumed, and it has stopped urgently again. The nickel market, which has attracted much attention, saw a dramatic scene on the first day of resumption of trading.
On March 16, the price of nickel actually fell below the price limit set by the exchange (5%), so the London Metal Exchange (LME) had to stop trading again due to technical problems. After LME investigation, it was said that "system error" caused nickel trading to fall below the upper limit, and a small amount of nickel trading with a price below the lower limit line would be cancelled. LME said that electronic trading of nickel will resume at 2 pm local time (22: 00 Beijing time).
Although Lenny restarted the transaction, the market turmoil caused by the battle for positions has not subsided. Some experts in the industry pointed out that the nickel incident had a certain impact on the global credibility of LME, so we should speed up the development of China nickel futures market to make it play a greater role in future industrial pricing. However, the nickel price may return to rationality after the abnormal rise in the previous period, but there is still the risk of large fluctuations, and investors should pay attention to risk management.
Nickel actually fell below the "price limit"
On March 6, Beijing time (08:00 am London time), nickel trading was suspended for several days. Changing the aggressive upward trend before, the opening price of nickel dropped rapidly by 5%, reaching the upper limit set by LME for nickel, which means that nickel fell at the opening price. At this time, the price of nickel is $45,590/ton.
Even more amazing is yet to come. Less than 20 seconds after the opening, there was a transaction of $45,395 in the market, and this price has fallen below the "daily limit price". 1 minute later, Lenny clinched another $43,995, which was staggering.
After that, LME announced the suspension of nickel trading and conducted an investigation. After LME investigation, LMEselect allows a small number of transactions under the daily limit line due to system errors, and this part of nickel transactions under the daily limit line will be cancelled. LME also said that it will continue to investigate its system errors and reopen nickel trading as soon as possible. LME said that electronic trading of nickel will resume at 2 pm local time.
Some industry experts pointed out that for the dramatic development of this nickel storm, the market once again focused on LME's complex and ancient spot trading habits and institutional defects. This nickel incident has had a certain impact on the global reputation of LME. We should speed up the development of nickel futures market in China, so that it can play a greater role in future industrial pricing.
According to the arrangement of LME, from March 15, the daily limit of metals except nickel will be 15% and 5% after the resumption of trading. This is the first time in LME history to introduce the price limit system, which may be due to lack of experience, leading to the embarrassing situation of falling below the "price limit".
"LME announced the implementation of price limits this week, which is an important measure to learn from the domestic nickel futures market in terms of trading system and market supervision. At present, as a new increase measure, more details have not been announced, and LME has no conclusion on whether the price limit is a temporary rule or a long-term rule. We may have to be tolerant and understanding of occasional communication mistakes. After all, no system is always perfect. It is not too late for the exchange to make up for it. " The above experts said.