The investigation into Fanya: what happened and why

The Fanya Metals Exchange last week bowed to government pressure and adjusted its trading rules, sparking discussion in the market about why this happened, and what the implications are. Here, Metal Bulletin looks at the background to the government action and the exchange's rule changes.

The Fanya Metals Exchange has transformed minor metals markets since it was launched in 2011.
Created as a way of matching cash from private investors with China's physical abundance of minor metals, the exchange has pulled into its investment scheme a good chunk of the supply of indium, bismuth, and other minor metals.
The so-called “Fanya effect” pushed up the prices of many minor metals as producers were able in many cases to sell to the exchange at a premium, which meant material was diverted from the industrial market.
This has naturally generated great interest in exactly how the Fanya Exchange's investment mechanism works, a question that Metal Bulletin addressed at the start of this year.
So, given this background, it has also not been surprising that when the recent government-backed investigation into Fanya resulted in a change of trading rules, minor metals market participants took a keen interest.

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Published

Carol Lu

December 03, 2014

12:35 GMT