Last year’s nickel crisis shows that risk controls and management at the London Metal Exchange are worse than those of its main Chinese rival, the Shanghai Futures Exchange, an executive at a Chinese state-owned brokerage said.
The comments from Zhang Bizhen, managing director at Minmetals Futures Co., a unit of China Minmetals Corp., drew a spontaneous round of applause in Shanghai on Thursday, where he was speaking at the CRU World Copper Conference Asia.
The LME has drawn fire from all sides since a massive nickel short squeeze caused prices to quadruple in a few days in March 2022, prompting the world’s benchmark metals exchange to suspend trading and cancel billions of dollars of trades.
“After last year’s nickel incident, I feel, to some extent, SHFE’s risk control and management is ahead of European and US exchanges,” Zhang said. “I wish the LME could learn from SHFE in terms of risk management, so that will enhance both Chinese and foreign investors’ feeling of security.”
The LME’s head of market development, Robin Martin, said on the same panel that the roles of the LME and SHFE are complementary rather than competitive. He said the two exchanges are working on initiatives together including joint product development opportunities.