I.n an unprecedented glitch, the Tokyo Stock Exchange suspended trading on the world’s third largest stock market for a day on Thursday. The Tokyo Stock Exchange (TSE) justified the failure with a defective computer. The conversion to the security system had failed. The exchange operator announced that it would resume trading on Friday. TSE President Koichiro Miyahara apologized and promised improvement. The stock exchanges in Sapporo, Nagoya and Fukuoka also stopped trading because they are technically attached to Tokyo. Derivatives trading in Osaka was not affected.
Market participants fear that the breakdown could damage the confidence of foreign investors in particular. The government wants to establish Tokyo as the most important financial center in Asia. Cabinet Secretary Katsunobu Kato called the incident “extremely unfortunate”. The default came on the first day of the quarter and the second half of the fiscal year, when funds often correct positions. At the same time, there was a much noticed economic figure with the Tankan report.
In terms of market capitalization, Japan is the third largest stock market in the world after America and China. Every day shares are traded for around 3 trillion yen (24 billion euros). More than 2100 companies are listed in the first segment of the stock exchange.
For the Tokyo Stock Exchange it was the first full day trading failure since the introduction of fully electronic trading in 1999. Fifteen years ago, trading was completely suspended for a few hours after a failed system update. In 2016, the exchange handled a large number of orders with only limited trading hours. At that time, the opening of the investigation into the Internet company Livedoor triggered a flood.
In 2010, the exchange introduced the faster “Arrowhead” trading system supplied by Fujitsu. However, this did not completely solve the problems. There were also minor mishaps afterwards, around 2012 when trading in 241 securities was suspended. The system was last updated in November last year. There are currently no plans to claim damages for Fujitsu’s breakdown, said Miyahara from TSE on Thursday.