Bagri defends role of LME
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Raj Bagri, chairman of the London Metal Exchange, yesterday urged the Government and the Securities and Investments Board not to give way to "jealously motivated pressures from abroad'' by clamping down on the market with tough new regulations that would drive business away.
During a strong defence of the LME's role in the Sumitomo copper scandal, which cost the Japanese company $2.6bn (pounds 1.7bn), Mr Bagri made a thinly veiled attack on Nymex, the New York commodity exchange, and on US regulators who have been demanding reforms of the way the LME is run.
The jealously motivated pressures to which he referred had come from "desperate competing exchanges or from other bodies who believe their way of doing things is the only way to do things".
Speaking at the LME's annual dinner, Mr Bagri said that "just to cite a couple of recent examples," the Daiwa Bank scandal went on for nearly 10 years under stringent US banking regulations and Metallgeselleschaft, the German group, lost more than $1bn trading oil on Nymex.
He added: "One would have thought that sinners would reflect before preaching the virtues of chastity."
A very significant part of the Sumitomo losses was incurred not on the LME but in over the counter trading, with the involvement of banks, Mr Bagri said.
The losses were "at the very least perpetuated and exacerbated by bank financing, largely outside the UK, involving hundreds of millions of dollars".
This bank finance was used for unusual and complex derivatives contracts outside the LME's jurisdiction and control, added Mr Bagri.
British regulators at the SIB are conducting a review of the LME, though recent indications are that they are not planning to announce radical reforms of the way the market is controlled.
Mr Bagri said it was an intensive investigation by the LME which eventually helped to flush out Yasuo Hamanaka, Sumitomo's errant chief copper trader, "from right under Sumitomo's nose, where he had been allegedly trading fraudulently, seemingly undetected, for more than a decade".
The affair was "yet one more example of the long and growing catalogue of failures by companies to exercise proper management control," said Mr Bagri.
The LME, for its part, would bring to book any firm or individual within its jurisdiction found to have broken its rules.
When the Sumitomo scandal broke in the summer, Nymex made clear it thought the problem was due to lax control of the London market.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments