The Moral Hazard of $4bn in Cancelled Nickel Contracts: WSJ

When a giant Chinese producer seemed unlikely to meet margin calls on nickel contracts this week, the London Metal Exchange (LME) stepped in and saved it, reports the Wall Street Journal.

China’s Tsingshan Holding faced margin calls on trades of about $1 billion, but instead of letting it fail the LME canceled the day’s more than 9,000 trades worth some $4 billion, the WSJ reported. “What is almost unprecedented here is that the exchange authorities decided to save them with money taken from other traders, who otherwise would be sitting on fat profits,’’ the story says. Full story: Wall Street Journal.

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Kevin Hamlin

Kevin Hamlin is a financial journalist with extensive experience covering Asia. Before joining Asia Financial, Kevin worked for Bloomberg News, spending 12 years as Senior China Economy Reporter in Beijing. Prior to that, he was Asia Bureau Chief of Institutional Investor for ten years.