Chinese regulators are investigating the status of futures brokers in relation to their client’s short positions in nickel following this week’s short squeeze, according to Reuters.
The agency spoke to three sources who said the Chinese Securities Regulatory Commission (CSRC) had asked future brokers to submit information on how many clients held short positions on nickel.
A number of big players held massive short positions in Nickel prior to prices rising in the wake of Russia’s invasion of Ukraine. The ensuing rush among short sellers to buy back nickel drove the price of nickel briefly beyond US$100,000 in a short squeeze.
It is suspected that one Chinese tycoon, Xiang Guanda, also known as “Big Shot”, is under pressure to make margin call collateral payments to show he can cover billions of dollars in potential losses.
The Shanghai Futures Exchange suspended nickel trading on Thursday in response to the surge on metal prices, following the London Metal Exchange on Tuesday.
Shanghai will resume some trading in nickel futures contacts from 11 March.
Reuters also reported the regulators had asked futures brokers to submit information on their hedging status and if they have nickel for delivery.