CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
London Metal Exchange Chief Executive Officer Matthew Chamberlain will stay in his role after all instead of leaving to run a crypto startup, as the bourse deals with the ongoing fallout from March’s nickel crisis.
Chamberlain’s imminent exit would have come at a tumultuous time for the LME, which has been harshly criticized for its handling of the unprecedented short squeeze in nickel. U.K. regulators announced a rare review following the chaos, and the exchange — where benchmark prices are set for the world’s key industrial metals — has seen open interest slump dramatically as traders and investors cut exposure.
“Events of recent weeks have brought into focus the importance of the LME and the metals markets,” Chamberlain said in the statement. “I want to continue to work with the team on supporting the long-term health and efficiency of the market and drive forward the sustainable development of our industry.”
Chamberlain announced early in the year he would leave at the end of April for a job at blockchain startup Komainu. The former banker was named CEO in 2017, as the LME sought to repair relations with core users and brokers after an outcry over owner Hong Kong Exchanges and Clearing Ltd.’s efforts to extract more profit.
While Chamberlain built an early rapport with the LME’s famously fractious user base, he found himself in a bruising clash with members last year over a plan to permanently close its open-outcry trading floor.
Last month, he once again became a lightning rod for criticism as investors reacted with fury when the LME halted nickel trading and canceled billions of dollars of transactions to rein in a runaway short squeeze centered on producer Tsingshan Holding Group Co.
Cliff Asness, the founder of multibillion-dollar asset manager AQR Capital Management, accused the LME at the time of “stealing money from market participants trading in good faith and giving it to Chinese nickel producers and their banks.”
There are broad expectations that the LME may face lawsuits from investors who stood to profit from the spike in prices, and Chamberlain will also need to liaise with U.K. regulators who are probing its handling of the crisis. Investigations by the Financial Conduct Authority and the Bank of England will examine the LME’s governance, market oversight and risk management processes following the massive spike in prices and halt on trading in early March.
The International Monetary Fund also said last week that the LME’s governance systems need to be strengthened in the wake of the squeeze. The exchange has said it sought to act in the interests of the market as a whole and acknowledges the concerns expressed by some market participants.
The scandal has also shone a spotlight on the LME’s clearinghouse, LME Clear, which was built in-house following HKEX’s acquisition in 2012 and is designed to insulate the exchange from the collapse of major users. The LME told members last month it would nearly double the size of the clearinghouse’s default fund, after the spike in prices brought several brokers to the brink of failure. The LME has said it faced a systemic risk to its market.
Adrian Farnham, who runs the LME’s clearinghouse and was set to take over as CEO on an interim basis, will instead retire in July. Catherine Lester, the exchange’s chief financial officer, will also leave to pursue other opportunities. Tabitha Silverwood, the current acting CFO, will succeed Lester next month.
(By Mark Burton, with assistance from Jack Farchy)
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