On Wednesday, the LME reopened trading on nickel after a week-long shutdown.
An opening price of $45,590 a tonne was identified for three-month nickel, the lower daily price limit set by the exchange.
According to a statement, LMEselect allowed "a small number" of trades to be executed below this lower daily price limit.
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A statement from LME COO James Cressy reads: "The LME immediately decided to suspend Nickel trading on LMEselect while the system error is investigated."
All nickel trades executed on LMEselect at the lower daily price limit will remain.
However, the LME will cancel the nickel trades executed on LMEselect below the lower daily price limit.
The closure only impacts electronic trading, with trading will continue in the inter-office market and at the open-outcry ring.
The investigation is ongoing with the LME aiming to reopen LMEselect for nick trading "as soon as possible".
This closure follows on from a week-long closure in nickel trading following a 250% surge in the price of nickel in two days.
Several smaller LME members came close to failing as the commodity was hit by Tsingshan Holding, China's leading stainless steel group, struggled to meet demands for cash.
LME suspended trading after this price surge occurred on 8 March.