A large Chinese producer held a vast short hedge against future output. When Russia's invasion of Ukraine threatened supply, the price rose, margin calls mounted, and the attempt to cover drove a self-reinforcing spiral: nickel went from about $25,000 to above $100,000 a tonne on 8 March 2022.
The LME suspended trading and then cancelled roughly $4 billion of trades executed that morning, restoring the previous day's price. Traders who had made money on the spike had it taken away, and litigation and regulatory criticism followed for years.
The episode is the strongest available reminder that an exchange's rulebook is a risk factor. Clearing house survival takes priority over any individual's profit, and "the trade was cancelled" is a loss scenario that no model prices.
Example: a fund long 200 tonnes from $28,000 saw a paper gain of over $14 million at the peak and realised nothing, because the trades in that window were voided and the market reopened near the prior settlement.
Related: short-squeeze, margin-increase, clearing-house, copper-futures, guaranty-fund