LME is hard to truly "just, open and fair"
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August 17 09:06:04, 2022
On January 13, 2005, the Financial Services Authority, the UK’s financial regulatory authority, formally announced that it had concluded its investigation of the Lloyd’s aluminum futures conspiracy case and stated that it will no longer take further action. The statement stated that "Given the current evidence, the Financial Services Authority ended its investigation and decided not to pursue the matter." The aluminum case of the LME (London Metal Exchange) which has lasted more than a year has finally settled. From the beginning to the end, both the exchange and the British regulatory authorities were "thunderstorms and no rain." This may be the attitude of the British regulatory authorities and the LME to Western speculators. Let us briefly review the whole story of the LME aluminum case: In the first half of 2003, the international aluminum spot supply was sufficient, demand was sluggish, and output was increasing. In particular, in July 2003, the aluminum stocks on the London Metal Exchange reached more than 1.3 million tons, a high level for more than eight years. It is against this backdrop that LME's aluminum spot has long been in a premium state during the first half of the year under the control of a “big family†under the influence of “great householdsâ€, namely the backwarding, which was once as high as more than 60 US dollars. It is believed that the trader grasped 1.5 million to 2 million tons of futures longs. This kind of spot virtuality that deviated from the market supply and demand caused the LME's attention at that time. In August 2003, LME began to investigate some kind of collusion in the aluminum market. After a four-month investigation, a preliminary investigation by the LME in December 2003 found that there may be some kind of collusion manipulation behavior and unfair market behavior in the LME futures market. The LME believes that due to non-members' violations, the Exchange was unable to supervise and it was handed over to the UK Financial Services Authority at the end of 2003. As LME spokesman Anna Campopi? é„„ano said, “Every time we will work hard to thoroughly manage the market so as to ensure that the market operates effectively and transparently.†Is that really the case? We may also remember clearly that, since the 1980s, a pile of “dark curtainsâ€â€”the “Greater Tin Crisis†in 1985, the Western Funds jointly attacked the countries that produced Tin, and the LME and the British regulatory authorities did not intervene. At the beginning of the 1990s, several large Chinese companies engaged in LME metal futures were misled by the Western Union's "joint tacit understanding" and the LME and the British regulatory authorities did not feel at large. In 1997, Zinc Futures at the Zhuzhou Smelter in China was run on the spot. When the spot premium was as high as more than 200 US dollars, who did not meet the survey? There are LG copper incidents, LG company was run, heavy losses. Chilean copper company copper futures were run, losing nearly 200 million U.S. dollars. When the investors of the third world countries all fell, the Western powers aimed at another strong-Japan's Sumitomo. If it weren’t for the United States and LME to investigate Sumitomo futures speculation violations, Sumitomo’s copper futures may not have lost $3.6 billion. While Sumitomo has been running the LME copper market for nearly 10 years (1988-1996), copper stocks have long been in the premium, and LME has never investigated. Throughout history, the Western futures market and regulatory authorities have always been “hands on mercy†to Western powers. They “hold one eye and close their eyes.†Even if there is some action, it will not end. I am afraid that similar incidents are not just LME aluminum incidents. In the first half of 2003-2004, the supply of international copper concentrates was very scarce, and the processing fees dropped again and again. Several major western suppliers “collaborated†to take advantage of price increases, hoarding, and intentionally reducing supply, resulting in an abnormally low processing fee for the international copper concentrate market. For this reason, in October 2003, the European Union, the United States Department of Justice, and the Canadian Competition Bureau launched an investigation. However, due to market and evidence collection, the investigation could not be completed. Therefore, we can say that the “fair, fair, and open†that the West always advertises is probably only a “patent†of some people. The real reason why the Western supervisory authorities “had nothing to do with the rain, no rain, and hastily ended†was probably the maker of the “rules of the gameâ€. It is the western “powers†​​that set the rules. It is also themselves that the supervision and management rules are implemented. The “boss of the casino†is impossible to allow outsiders to enter into a lot of profits and go. Therefore, to achieve real market justice still requires the constant efforts and appeals of all parties involved in the market. Hopefully, in the near future, the true "openness, fairness and fairness" of Western financial markets can be seen.