Bloomberg News | January 13, 2023
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London Metal Exchange trading data briefly showed a 77% drop in the global benchmark price for copper after its system transmitted incorrect pricing, in the latest technical setback at the embattled exchange.
The error came at the close of trading in the LME’s second open-outcry pricing session, which sets the global benchmark price for the physical metals industry. The mistake was a result of a data-entry error, according to a person familiar with the matter.
While the final price in the trading ring was set at $9,130 a ton, the LME’s external data feed showed a price of $2,130 a ton. In a subsequent notice, the LME asked data vendors to update their pricing feeds accordingly, and apologized for any inconvenience caused.
The glitch had no follow-on impact on prices or trading and was quickly resolved by the LME. Still, the episode marks the latest in a string of technical setbacks at the exchange, including several complications that arose when it resumed trading in the wake of the last year’s historic nickel squeeze. In the runup to the crisis last year, its clearinghouse also generated a “high number” of erroneous margin calls that for some brokers totaled hundreds of millions of dollars.
At the start of last year, the exchange also experienced a five-hour outage impacting its electronic trading platform, where roughly a third of trading takes place. The remainder takes place in a telephone-based interoffice market, in addition to a small volume of trades that take place in the Ring.
While Friday’s pricing issue was quickly addressed, the latest glitch comes at a time when the LME continues to deal with the fallout from the nickel crisis last March, which thrust the exchange into the global spotlight and raised questions about its future at the center of global metals markets.
Copper was trading at $9,183.50 a ton as of 3:14 p.m on the LME, little changed on the day.
(By Mark Burton, with assistance from Kenneth Hughes)
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