Major metal futures contracts declined sharply following a directive from a Chinese exchange to decommission high-speed trading servers, disrupting algorithmic trading flows. The move triggered volatility across commodity markets.
- China exchange ordered removal of 370 high-speed trading servers effective January 17, 2026
- Copper futures dropped 3.4% on Shanghai Futures Exchange, 3.1% on LME
- Zinc fell 4.1% on SHFE, nickel declined 3.6% on LME
- Systems targeted operate with sub-100-microsecond trade execution times
- Regulatory action cited market fairness and systemic risk as primary concerns
- Global commodity trading firms report immediate impact on liquidity and execution
Global metal futures prices fell on Monday after a national financial exchange in China issued an order requiring the immediate removal of high-speed trading servers from its infrastructure. The directive, which affects multiple commodity derivatives platforms, targeted ultra-low latency systems used for algorithmic and high-frequency trading, citing concerns over systemic stability and market fairness. The compliance action, effective January 17, 2026, requires exchanges to disable or physically remove servers capable of executing trades in under 100 microseconds. This includes over 370 high-performance computing nodes previously deployed by major domestic and international trading firms. The exchange’s directive explicitly stated that these systems were not compliant with new regulatory standards on market integrity and data transparency. As a result, metal futures across key benchmarks saw sharp declines: copper futures dropped 3.4% on the Shanghai Futures Exchange, zinc fell 4.1%, and aluminum dropped 2.8%. On the London Metal Exchange, prices followed suit, with copper down 3.1% and nickel declining 3.6%. The sell-off was triggered by the sudden reduction in liquidity and the collapse of high-frequency trading strategies reliant on low-latency access. Market participants, including hedge funds and commodity trading advisors, reported significant disruptions in execution speed and trade volume. The move has prompted concerns about reduced market efficiency and increased bid-ask spreads, particularly for thinly traded contracts. Brokers and clearing houses are now reassessing their infrastructure strategies in response to the regulatory shift. The directive is part of a broader regulatory effort by Chinese authorities to limit speculative trading in commodity markets and reinforce centralized control over financial infrastructure. The impact is expected to ripple across global commodity markets, with other exchanges in Asia and Europe reviewing their own server deployment policies.