Jpmorgan Chase Is Reviewing Its Exposure To Commodities After The London Stock Exchange Demon Nickel Debacle.

JPMorgan Chase & Co. is reviewing its business with some commodities clients following last month's Nickel short squeeze in London, a move that could lead to further outflows from the sector.

Senior management at jpmorgan has asked teams around the world to conduct new due diligence on some existing clients, including metals traders and refiners, according to people familiar with the matter. Jpmorgan is also conducting risk assessments of certain financing units, according to people familiar with the matter.

Jpmorgan, one of the biggest players in the global commodities markets, was caught up in last month's Nickel short squeeze in London. The bank is the biggest counterparty to short positions in the nickel market by Aoyama Holdings, the world's largest nickel producer.

Of the more than 150, 000 tonnes of nickel short positions held by Xiang Guangda, castle Peak's actual controller, about 50, 000 tonnes were in off-exchange positions traded with jpmorgan, according to media reports last month.

Prior to the nickel squeeze, jpmorgan was already monitoring and adjusting its commodity exposure because of increased market volatility, another person familiar with the matter said. The bank has been conducting a more in-depth review since nickel prices spiked in early March, this person said.

"Consistent with prudent risk management, we have been assessing risk in light of the significant market events that have occurred so far this year, and we will continue to do so in all markets, but we remain committed to our commodities business." Jpmorgan said in a statement.

Liquidity in commodity markets has fallen sharply as high prices and wild swings have forced traders to the sidelines. And now any possible reduction in jpmorgan's exposure could drain more liquidity from the industry.

While the review covers clients across jpmorgan's commodities business, the focus is on base metals and businesses related to trading on the London Stock Exchange, according to people familiar with the matter. One question the bank is considering is how to stress test its operations to cope with unprecedented shocks, such as a nickel short squeeze, a person familiar with the matter said.

据熟悉此事的人们表示，尚不清楚审查结果的结果，但它可能导致JPMorgan衡量其商品业务。该银行已经降低了它的镍市场。它还要求额外的管理层批准金属部门的新融资交易。