The London Metal Exchange (LME) delayed the resumption of nickel trading during the Asian session by a week to March 27 after it was found on Friday, March 17, that nickel did not meet contract specifications at LME warehouses. The LME last week announced it had canceled nine nickel contracts — worth about $1.3 million.

The move is another blow to the world's oldest and largest base metals market, which has been pinning its hopes on a restart of Asian trade to boost liquidity in a contract that has struggled since the nickel crisis a year ago.

According to Bloomberg, JPMorgan Chase & Co. owned the London Metal Exchange nickel contracts that turned out to be backed by bags of stones rather than metal, after discovering “irregularities” at a certain warehouse, which Bloomberg has reported was owned by Access World. The news has been met with shock in the metals world, because LME contracts are generally viewed as beyond question.

The news isn’t the first blow to LME’s dwindling reputation. UK watchdog is still probing LME nickel trading suspension when on March 8 the exchange cancelled all nickel trades after prices spiked by more than 50% in a matter of hours to above $100,000 a tonne. Also, well-known international commodities' trader Trafigura last month alleged that it discovered “systematic fraud” in shipments that did not contain nickel and begun corresponding legal proceedings.

This means that LME is poised to start losing competition to other prominent global commodities trading venues such as Tokyo Commodity Exchange, Bombay Stock Exchange in India and Dalian Commodity Exchange in China.