October 23, 2020

Market and Financial News Aggregator

Tokyo stock exchange halts trading in worst outage since 1999

2 min read

Tokyo’s stock exchange suffered its worst outage since it shifted to fully electronic trading in 1999, as a system error knocked out the world’s third-largest bourse for a full day and threw investment strategies into chaos.

Thursday’s shutdown, which fell on a critical day of economic data releases and portfolio rebalancing, affected more than 2,500 stocks listed on exchanges run by Japan Exchange Group. The company is Asia’s largest operator in terms of listed companies’ market capitalisation. 

The exchange announced the halt shortly before the market was due to open at 9am. It later said the closure would last for the full day.

The outage — the first to impact all listed stocks on the TSE since one in 2005 that lasted part of the day — also hit exchanges in Nagoya, Fukuoka and Sapporo, which use the same underlying cash equity trading system built by technology group Fujitsu. It was unclear, however, whether the problem arose from a separate data management system that was not designed by Fujitsu.

A spokesperson for Fujitsu told reporters the company was investigating. A JPX spokesman said it had ruled-out hacking or a cyber attack.

Japan’s chief cabinet secretary, Katsunobu Kato, said the shutdown was “highly regrettable” as it curtailed investment opportunities.

Derivatives trading continued as normal on the Osaka Exchange, which is owned by JPX but relies on different systems.

JPX said it did not know whether trading could resume on Friday, leading brokers and market strategists to predict intense volatility when it does eventually restart. JPX also halted activity on ToSTNeT, its platform for off-auction transactions, and said it would announce later on Thursday its plans to restart it.

A spokeswoman for Nomura, Japan’s largest brokerage, said it was taking customers’ orders but warning them that trades might not go through. 

The TSE suffered a series of embarrassing glitches in the mid-2000s but had been relatively stable since 2010, when it introduced Fujitsu’s “Arrowhead” trading system. The last time it was forced to suspend all share trading was in 2005.

The outage comes on a day when equity volumes would traditionally be high, said brokers. October 1 is the first day of both the new financial quarter and the second half of Japan’s financial year. That means funds are often active as they adjust portfolio weightings. 

The Bank of Japan also released its closely watched Tankan survey, a quarterly report that investors use to gauge the mood and outlook of companies. The Tankan, released shortly before trading should have begun, showed sentiment among Japan’s big manufacturers was improving less quickly than expected.

2020-10-01 01:02:17

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