LME to Nearly Double Its Default Fund After Nickel Squeeze
- Increase comes after stress-testing members’ positions
- The bourse said nickel’s record spike posed a systemic risk
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The London Metal Exchange told members it will nearly double the size of its clearinghouse default fund as the exchange grapples with the fallout from an unprecedented short squeeze that roiled metals markets this month.
The default fund is expected to increase to $2.075 billion from $1.1 billion in April as a result of the exchange’s monthly stress-testing exercise, an LME spokesperson said on Friday. The move comes after a record spike in nickel prices earlier this month and wild swings in recent sessions that have put the metal on course for a 49% monthly gain, the biggest increase since 1988.