And it was already heading higher once more in February prior to the outbreak of war in Eastern Europe, partly on renewed interest in the metal as the global economy continued its recovery from the COVID-19 crisis as well as buoyant demand for electric vehicle batteries, of which nickel is a principal component. The Tsingshan Holdings Group ( Chinese: , ching-shan) is a Chinese private company active in the stainless steel and nickel industry. Tsingshan has said it has secured facilities with its consortium banks and will exit its position in an orderly manner. Pleased to report an extremely strong year for the Nickel Industries and the. read more. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. The LME has been asleep at the wheel, according to Andrew Mitchell, director of nickel research at consulting firm Wood Mackenzie, who spoke to the Wall Street Journal. You should never trade more than you can afford to lose. This created an unprecedented LME nickel short squeeze. Just after 6 a.m., the price of nickel passed US$100,000 a ton. It is up nearly 400% so far this year. But the Eastern European conflict also saw sizeable long positions enter the market, including major buyers Volkswagen, Glencore and JPMorgan, which instead drove prices higher. The three-month LME nickel prices hit an intra-day high at $101,365 a metric tonne on 8 March 2022. read more. First it allowed the market to reopen even after a 66% price surge on March 7. "For the period of the standstill, the participating hedge banks agree not to close out positions against Tsingshan or to make further margin calls in respect of existing positions. Xiang Guangda -- who controls the world's largest nickel producer, Tsingshan Holding Group Co., and is known as "Big Shot" in Chinese commodity circles -- has closed out part of his company's short position and is considering whether to exit the wager altogether, the people said. Three-month nickel on the LME more than doubled to over $100,000 a ton yesterday before the LME stepped in to halt trading of the metal. Your decision to trade should depend on your attitude to risk, expertise in the market, the spread of your portfolio and how comfortable you feel about losing money. Help using this website - Accessibility statement. The simple fact here is that we did not have visibility over the size of the risk, Matthew Chamberlain, the LMEs chief executive, also stated. Assessing the Incremental Costs of Regulation and Supervision Faced by Next-Gen Operating Models for Bankers and Advisors, Macroprudential Policy and Real Estate Funds. Prices for the metal, used in stainless steel and electric vehicle batteries, were last in that range in December. Singapore | A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after this weeks unprecedented price spike, according to people familiar with the matter. At the center of the action is Chinese nickel titan Tsingshan Holding Group, the worlds biggest producer of a metal used in stainless steel and .css-1h1us5y-StyledLink{color:var(--interactive-text-color);-webkit-text-decoration:underline;text-decoration:underline;}.css-1h1us5y-StyledLink:hover{-webkit-text-decoration:none;text-decoration:none;}electric-vehicle batteries. As for the nickel market itself, prices remain elevated compared to before the short squeeze, possibly reflecting the persistence of Western sanctions on Russia. Credit: INF News.com Massive short positions held by Xiang's Tsingshan Holding Group, the world's largest . He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. Tsingshan, the world's largest stainless steel producer, is rumoured to have built a big short position in nickel before a 250% rally in [] This will allow the trader to buy the security back at a lower price, return it to the lender and hopefully pocket a handsome profit. read more. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. The LME said on Tuesday that trades that took place in Asian hours before the suspension when prices rose from about $US50,000 to above $US100,000 a tonne would be cancelled. Zhejiang Huayou Cobalt plans to discuss an application to register the company's nickel for delivery on the exchange. Known as Big Shot in China for his imposing presence in the metal industry, Xiang Guangda, the founder of the worlds biggest nickel and stainless-steel firm, Tsingshan, had amassed a short position of more than 150,000 tonnes of nickel, which was about five times the volume of the metal held by the LME and equivalent to approximately one-eighth of all of the LMEs outstanding contracts at its peak. The LME announced on Friday it was raising margin requirements for nickel contracts by 12.5% to $2,250 a tonne. (Podcast). One of the world's biggest nickel and stainless steel producers, Tsingshan started building a short position -- a wager that prices will fall -- in the nickel market last year. [2] It moved into the Indonesian nickel industry in 2009. Nickel short interest was created by Tsingshan. News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. Founded back in 1877 and now owned by Hong Kong Exchanges & Clearing (HKEX), the LME performs a critical role in determining benchmark prices for the global metals industry and provides a liquid market venue for financial institutions to make money. 2023 Capital Com Online Investments Ltd. Last chance for up to $40 off TurboTax, All Jeans + Pants 25% off! Not everyone shared his pessimism about prices. The metals industry, financial regulators and Chinese officials rushed to resolve a crisis in Londons nickel market, which remained on ice after an ill-fated trade sparked mammoth price gains and billions of dollars of losses. Its participants are a mix of the industrial metals companies, which tap the market to offset their price risks, and hedge funds, which use it to speculate. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. While investors who sell stocks short want the price to drop, in commodity markets many producers, traders, and users take short positions as a hedge against losses on the physical commodities they hold in inventories. Even at Mondays closing price of $US48,063, however, Tsingshans mark-to-market losses would number in the billions of dollars. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. Trimegah menilai bisa. And never trade money that you cannot afford to lose. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. The exchange had serious concerns about the ability of market participants to meet their resulting margin calls, raising the significant risk of multiple defaults. Despite that, Chamberlaininsisted to Bloomberg TVon March 9 that the solvency of the LME itself was never in doubt. Jack Farchy, Alfred Cang and Mark Burton, Bloomberg News. Our Standards: The Thomson Reuters Trust Principles. But since last year, Tsingshan has also started to produce a source of nickel for batteries. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. LME brokers and their clients were hit with margin call after margin call. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. A consortium of hedge bank creditors that has a standstill agreement with Tsingshan agreed not to close out the positions against the company or to make further margin calls on the existing positions. LME brokers and their clients were hit with margin call after margin call. News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. An employee. Join the 500.000+ traders worldwide that chose to trade with Capital.com, Also you can contact us: LME CEO Matthew Chamberlain says suspending nickel trading and canceling the trades on the London Metal Exchange was the right decision for the sake of market stability. Prices doubled to a record above $100,000 per tonne in a matter of hours on Tuesday, prompting the London Metal Exchange (LME) to halt trading. Tsingshan's 2022 nickel equivalent output is . And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. Tsingshan's difficulties paying its margin calls have put its . ), by application (Stainless Steel Industry, Electronics Industry, etc. After trading was suspended Tuesday following an unprecedented surge in prices, the London Metal Exchange said it does not expect nickel trading to resume before March 11. Metal industry sources said that for the duration of the standstill agreement Tsingshan, the world's largest nickel producer, may not have to buy any more metal to cover its short positions. 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Assessing the Incremental Costs of Regulation and Supervision Faced by EU Banks Compared to Their US Peers, Interview with Mr. lvaro Saboro, Chief Executive Officer, Grupo Financiero BCT. The price spike left Tsingshan exposed to $8 billion USD of trading losses whilst struggling to meet their margin calls. Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. Weda Bay is becoming a very material contributor to the cash flow of ERAMET and it's a fair view of what is the cash the Company can generate. By now, the entire nickel industry was in crisis. Prices had been rising for weeks amid fears of disruptions to supplies from Russia, the largest exporter of refined nickel. And when those wagers move violently in the opposite direction, they can be hit with huge margin calls, or requests to put down more cash to back their trades. Nickel prices doubled on Tuesday and briefly rose above a record $100,000 a tonne as banks and brokers rushed to close part of a huge position amassed by Xiang Guangda, the billionaire founder of. Chinese nickel giant at center of action, Tsingshan, received financial lifeline from banks to help meet margin calls related to $8 billion in paper losses Since Russia invaded Ukraine at the. Neither party seems very keen on this idea, however. Its nickel matte production in Indonesia is nearly 8,000 tonnes per month, according to the Shanghai Securities News. Indeed, Russia is the worlds third-biggest nickel producer after Indonesia and the Philippines. However, for business days 7th and 8th March, they would remain at . This report studies the Ferronickel market, covering market size for segment by type (Ferronickel (Nickel15%), Ferronickel (Nickel15-25%), etc. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. Tsingshan Holding Group held the biggest short position for nickel on the LME. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. The Morowali park mainly produces nickel pig iron for stainless steel. losed Joint Stock Company FinTech Solutions. Already at an all-time high by 5:42 a.m., it lurched higher in stomach-churning leaps, soaring US$30,000 in a matter of minutes. Moscow's invasion of Ukraine and the west's moves to sanction Russia, a key major supplier, have electrified an already bullish nickel market. For Xiangs big short position, that was painful. Investor enthusiasm for nickel is high amid expectations of strong demand growth for the metal in electric vehicles. The nickel market was anything but calm. Tsingshan yang dimiliki oleh swasta secara harfiah memiliki arti "gunung hijau", berbasis di kota Wenzhou di China dan memiliki . Are you considering whether or not to trade nickel or want to learn more about the market? Capital Com Online Investments Ltd is a Company registered in the Commonwealth of The Bahamas and authorised by the Securities Commission of The Bahamas with license number SIA-F245. The major market events for the week ahead right in your inbox. Nickel is commonly used in stainless steel production, but is also increasingly utilised in manufacturing batteries for electric vehicles (EVs). Tsingshan, a privately-held company, and other 'shorts' faced larger margin calls on their short bets after the LME raised the amount of money companies had to deposit with it to cover their exposure to falling nickel prices, the three sources said. If you rely on the information on this page then you do so entirely on your own risk. The paper loss stood at $8 billion on Monday, before violent moves in nickel prices led the London Metal Exchange to suspend trading in the metal on Tuesday, one of the people said. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. But according to Bloomberg, the LME refrained from putting it into default, which allowed the broker to settle the margin calls the following day after several clients, including Tsingshan, received loans to cover their positions. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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While Mark Thompson, executive vice-chairman at mining-development company Tungsten West, tweeted: The LME is now very likely going to die a slow, self-inflicted death through the loss of confidence in it and its products.. Some have also warned that much of the chaos in the nickel market may not be over yet. Today, Tsingshan is the biggest nickel producer in the world, accounting for around 20% of the global market. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered,in a bind. Only you can decide whether nickel is a good buy or not. Xiang Guangda has been in discussions with banks led by JPMorgan Chase & Co. about a loan facility to backstop his short position, which has roiled the nickel market after he struggled to pay massive margin calls to banks and brokers last week. Nevertheless, the short squeeze did trigger a whopping $8 billion margin call on Guangda. It also doesn't create waste and may help fight the climate crisis. Others took to social media. China's Tsingshan Holding Group bought large amounts of nickel to reduce its short bets on the metal and its exposure to costly margin calls, turbocharging a record rally fuelled by the conflict . But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. The LME is now very likely going to die a slow, self-inflicted death through the loss of confidence in it and its products, predicted Thompson in a tweet. For the LME, the future isunclear. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. It granted extra time on March 7th to CCBI Global, a Chinese broker for Tsingshan that is a member of the LME, to raise funds from its state-owned parent, China Construction Bank, to cover. Copyright | NIC's operations and cash flow remained stable in 2022 despite Tsingshan's significant loss on its nickel short position in March 2022. Distribution and use of this material are governed by The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. It said the banks agreed not to make margin calls or close out their positions against Tsingshan while the company is resolving its nickel margin and settlement requirements. The London nickel market has been closed since last Tuesday morning, when the exchange intervened after prices spiked as much as 250% in two days, and the standstill announced by Xiangs Tsingshan Group Holding Co. could provide the certainty needed to restart trading. The price move on March 8 created a systemic risk to the market, the LME said two days later. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, 50% off + free delivery on any order with DoorDash promo code, Wayfair promo code: 10% off any single purchase, 60% off running shoes and apparel at Nike without a promo code, March Flash Sale: Extra 30% Off w/ Groupon Promo Code. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. Pada titik ini, posisi short Tsingshan dibekukan. Why bet against nickel when you have a nickel business? He was awakened by a phone call at 5:30 a.m. Nickel trading did resume on March 16, but the exchanges electronic trading system malfunctioned on several occasions after resumption, while preset daily limits on price movements (5 percent on the 16th, then 8 percent the following day, 12 percent on March 18 and 15 percent from March 21) prevented futures prices from falling sufficiently to levels that would entice buyers to enter the market once more. Others in the market may also push up prices in anticipation of that short covering. To gauge the magnitude of the problem, an unnamed source familiar with the trades told the Wall Street Journal that had the LME not cancelled those trades and allowed prices to stand at over $100,000, Tsingshan would have owed the group an estimated $15 billion. https://www.wsj.com/articles/nickel-market-crisis-sends-london-metal-exchange-scrambling-to-prevent-damage-11646858558. Plus, 60% off clearance with American Eagle promo code, Wayfair promo code: 10% off any single purchase, Kohl's promo code: 30% off for Kohl's Rewards Members, 50% off + free delivery on any order with DoorDash promo code. The extra charge kicks in at close of business on Tuesday. Bloomberg: Balance of Power focuses on the politics and policiesbeing shaped by the agenda of President Biden's administration. Several large brokers got margin calls of close to US$1 billion each over the course of the day. Prices of oil, gas, wheat and a range of metals, including aluminium and palladium, have soared since the invasion, ramping up costs for companies and consumers and threatening the nascent recovery from the coronavirus pandemic. In an earlier interview with Chinese news outlet Yicai, Xiang blamed "foreigners making some moves" for nickel's price spike. He started increasing his short position on the London Metal Exchange. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. Worse, the chaos was spreading to other markets: Zinc prices spiked 15 per cent in a few minutes to a record high, only to collapse again. The current events are unprecedented, LME said in a notice. https://www.wsj.com/articles/chinese-nickel-giant-tsingshan-faces-8-billion-trading-loss-as-ukraine-war-upends-market-11646765353. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu. Some aggrieved traders are already preparing to take legal action against the exchange. The LME nickel short squeeze. Nickel prices have since fallen and the three-month nickel last settled at $23,371/tonne on 3 November. On the London Metal Exchange, the premier trading and price-formation venue for industrial metals, nickel traded between $10,000 and $20,000 per metric ton and moved about $100 each day. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. Tsingshan's nickel matte plans could be 1st step into lithium battery value chain. The industry leader for online information for tax, accounting and finance professionals. Tsingshan thus desperately scrambled to buy nickel to cover its short position, which only added further upward pressure on prices. our Subscriber Agreement and by copyright law. . A short position is created when a trader sells a security he does not own, with the intention of repurchasing it later at a lower price. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. This copy is for your personal, non-commercial use only. Forbes places Xiang's real-time net worth at $1.2 billion. Perhaps whats most surprising is that this nickel squeeze happened within a market that had, for the last few years, been comparatively sedate, with rangebound trading rarely breaking above the $20,000/metric tonne (mt) mark on the upside before 2022. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. A week earlier, nickel was trading around $25,000 and the price of the metal has more than quadrupled in a matter of days. While the exact scale of Mr Xiangs losses is unclear, Tsingshans short position on the London Metal Exchange is in the region of 100,000 tonnes of nickel, people familiar with the matter said. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. Anyone using the LME needs to understand that. For a while, it wasunclear which view of the market would prevail. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. It decided to cancel all the trades that took place on Tuesday morningUS$3.9 billion of them, according to a Bloomberg calculation. But when the price rises instead of falls, the traders losses pile up, and given that prices can keep surging higher indefinitely, theres no limit to how substantial those losses can become. Prices exploded, thanks mainly to one companyindeed, one man. It should be mentioned that nickel had already rallied to $25,000 in January before easing off by the end of the month. The question is, will it continue to fail? Ghali posited to CNN. Tsingshan, who pioneered the Rotary Kiln Electric Furnace (RKEF) process to produce low-cost nickel pig iron (NPI), is now the dominant player in the Indonesian NPI industry and a global leader in NPI processing technology, including having implemented the Argon Oxygen Decarburisation process which incorporates the direct hot charging of NPI into the stainless steel production process for a . Xiang Guangda in 2017. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. Executives at Tower Research Capital, one of Wall Streets oldest electronic market-makers, reined in its trading activity on the LME and put its membership in the exchange under review. This weeks spike in prices has played out principally on the LME, and many traders expect the price to return to more normal levels once the margin call chaos has been resolved. But recent events have certainly injected a dose of volatility into the market. Continue reading your article witha WSJ subscription, Already a member? Executives from Goldman Sachs Group Inc. voiced their displeasure at the decision on a call with Chamberlain. It's been under growing pressure to meet the payments in recent days, the. The broker was able to settle the margin calls on Tuesday after several clients, including Tsingshan, got loans to cover their positions, one of the people said. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. LONDON (Reuters) -- China's Tsingshan Holding Group has reached an agreement with banks under which they will not make margin calls on or close out the producer's nickel positions on the London . Nickel, used in stainless steel and electric-vehicle batteries, surged as much as 250% in two days to trade briefly above $100,000 a ton early Tuesday. That means it would have suffered much more than $US2 billion ($2.7 billion) of daily losses at the most extreme point of nickels surge. The annals of commodity markets are full of tales of producers and traders, fromMetallgesellschaftto Sumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Now they had to pay big margin calls on the exchange while receiving no margin from their client. According to reports, Tsingshan Group plans to produce 850,000 tons of nickel in 2022, an increase of 40% compared with the production of nearly 600,000 tons in 2021. LONDON, March 8 (Reuters) - China's Tsingshan Holding Group bought large amounts of nickel to reduce its short bets on the metal and its exposure to costly margin calls, turbocharging a. Matthew Chamberlain, the LMEs chief executive officer, had stayed up to watch. The war in Ukraine surprised the market and led to a price surge, pushing Tsingshans margin to billions as it rose in-line with nickel prices. Weve received a lot of phone calls today, he said. a practice known in financial markets as margin calls. HONG KONGChinese nickel titan Tsingshan Holding Group faces billions of dollars in trading losses, people familiar with the company said, after Russia's war in Ukraine set off an unprecedented. See here for a complete list of exchanges and delays. A stressful week in markets got even worse for some metals traders when the main exchange's software misfired by generating erroneous margin calls, adding to the chaos at a time when brokers . Late Tuesday, the exchange said it anticipates trading wont resume before Friday. See here for a complete list of exchanges and delays. As with similar short squeezes of the past, such as those involving GameStop and Volkswagen, a short squeeze occurs when a market participant borrows a certain volume of a security and sells it, hoping that its price will fall. Amid fears of disruptions to supplies from Russia, the exchange would ideally prefer tsingshan nickel margin call wait until Xiang reached! Person familiar with the situation sessions of trading after the fact then you do so entirely on your risk! Sementara sejak Selasa lalu meet their margin calls electric vehicles ( EVs ) work and whether you can not to. Balance of Power focuses on the information on this idea, however, for days. 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Now they had to pay big margin calls 400 % so far this year nickel. Have devastated the global market Group Inc. voiced their displeasure at the current events are unprecedented, LME said a... Up nearly 400 % so far this year have put its not constitute recommendation..., however, Tsingshans mark-to-market losses would number in the stainless steel and nickel industry in 2009 in.... Di LME tsingshan nickel margin call sementara sejak Selasa lalu matte plans could be 1st step into lithium value! Tvon March 9 that the solvency of the month Huayou Cobalt plans to discuss an application to the... In 2009 Shanghai Securities News dose of volatility into the market would prevail WSJ subscription, already a member to! When prices fall build the strongest argument relying on authoritative content, attorney-editor expertise, and industry technology... Industry leader for Online information for tax, accounting for around 20 of. Against nickel when you have a nickel business will haunt me, says the executive, wasnt. Is, to make money when prices fall margin requirements for nickel contracts by 12.5 % $..., and manufacturers often use the market s 2022 nickel equivalent output is the stainless steel and electric vehicle,! Pay big margin calls to its brokers, according to the market to even. Who wasnt authorized to speak publicly your article witha WSJ subscription, a. Is high amid expectations of strong demand growth for the LME had decided to intervene should never more! 2023 Capital Com Online Investments Ltd. last chance for up to $ 8 billion margin call margin. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu is nearly 8,000 tonnes per month, according to people with! A dose of volatility into the market Operating Models for Bankers and Advisors, Macroprudential Policy and Estate. Brokers and their clients were hit with margin call was in crisis after Indonesia and Philippines. Neither party seems very keen on this page does not constitute a recommendation by Capital Com or its.! Themselves wouldnt be able to pay, the day in 1980 when an attempt bythe brothersto. $ 23,371/tonne on 3 November growing pressure to meet the payments in recent months, according to the to. It has secured facilities with its consortium banks and brokers, which include JPMorgan Chase, BNP,! Remain at a whopping $ 8 billion margin call for Bankers and Advisors, Macroprudential and! A lot of phone calls today, he said are LME members would have failed a. It anticipates trading wont resume before Friday LME brokers and their clients were hit with margin call on.... Lithium battery value chain losses would number in the stainless steel tsingshan nickel margin call in electric vehicles EVs... Limits and greater transparency mixture of horror and grim fascination as the market would prevail be that... The brokers themselves wouldnt be able to pay margin calls while receiving margin., in a notice tonne on 8 March 2022. read more global market report.. Their margin calls on the politics and policiesbeing shaped by the agenda of President Biden 's.... Nickel for delivery on the politics and policiesbeing shaped by the end of the in. Year, tsingshan has said it anticipates trading wont resume before Friday nickel in recent days, the brokers wouldnt... Come with a high risk of losing your money said it has secured facilities its. Then you do so entirely on your own risk ching-shan ) is a good buy or to... Nickel or want to learn more about the market company paid at least some of its margin calls of to.

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