• Kyodo


Financial regulators conducted an on-site inspection of the Tokyo Stock Exchange on Friday following a system failure that caused a full-day trade suspension earlier this month, Finance Minister Taro Aso said.

The Financial Services Agency is expected to examine the bourse's governing structure and also interview officials operating its systems about the details of the shutdown on Oct. 1.

In the worst outage since the TSE's trading system was fully computerized in 1999, the problem was caused by a memory issue in a server in its trading system and a failure of the auto-backup system that was blamed on a settings error, the bourse said.

"We need to assess why its backup system failed," Aso told reporters.

The TSE disclosed Monday that one of the settings was altered in 2015 when the Arrowhead trading system was updated, but the bourse was unaware of the change as it was not reflected in the manual provided by the system's developer Fujitsu Ltd.

The TSE has said, however, it has no plans to seek compensation from Fujitsu, adding it expects the developer to implement improvement measures.

The bourse said it will conduct thorough checks of current system settings while running scenario drills with securities companies to test the process for switching to a backup system if a similarly serious technical problem reoccurs.

It has set up a panel, which includes securities houses, investors and system vendors, aimed at creating new rules on how to resume trading in the wake of a suspension. The first round of discussions will be held later Friday.

Around ¥3 trillion ($28.6 billion) is traded daily on the TSE, according to the bourse. Its market capitalization, with about 3,700 listed companies, is the third largest in the world, behind the New York Stock Exchange and the Nasdaq Stock Market in the United States.

The system breakdown came at a time Prime Minister Yoshihide Suga has pledged to make digitalization a top policy priority and as Tokyo is making efforts to attract more foreign financial institutions and talent in a bid to become a more attractive global financial hub.

The government is aiming to accelerate such efforts since Hong Kong's status as a stable and reliable base in Asia has been hurt by China's tightening of its grip over the semiautonomous territory.

With New York and London dominating the top two spots, Tokyo ranks fourth after Shanghai in the global financial centers index released by a British think tank. Hong Kong and Singapore come in fifth and sixth.

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