Japan’s financial regulator will demand a full report into the technical problems that paralysed the Tokyo Stock Exchange and plunged the world’s third largest exchange into an unprecedented full-day shutdown.
Japan’s finance minister, Taro Aso, said on Friday that the Financial Services Agency (FSA) would order a “swift” explanation from the TSE, which suffered its worst outage in more than 20 years on Thursday, and take measures to ensure there was no repeat.
“The TSE must investigate the cause and prevent recurrence and the FSA must carry out a thorough verification,” Mr Aso told reporters after a Friday cabinet meeting and following a resumption of trading on the TSE.
Calls to the TSE on Friday morning went unanswered. The FSA declined to comment on any current or future orders regarding the TSE.
Traders reported that activity on the exchange on Friday appeared broadly normal, though volumes were lower than many had expected. At the end of the morning session turnover was a below average ¥1.2tn ($11.4bn), though dealers also pointed to holidays in mainland China, Hong Kong and South Korea as causes of subdued activity.
After all orders placed on Thursday were declared invalid, the benchmark Topix began trading on Friday based on Wednesday’s closing prices. In the first few minutes of the session it rose as much as 0.8 per cent but turned negative after it was confirmed that President Donald Trump had tested positive for Covid-19. The Nikkei 225, the preferred index of Japanese retail investors, was 0.3 per cent higher in afternoon trading.
In a press conference on Thursday, the TSE said that the day’s outage was caused by a hardware issue in its underlying “Arrowhead” system, which was designed in partnership with Fujitsu. The company’s stock jumped shortly after the market opened but later traded 1.6 per cent lower.
“It looks like investors are giving the market the benefit of the doubt that yesterday's outage was indeed a one-off event,” said Takeo Kamai, head of executions services in Tokyo at brokerage CLSA.
Traders at Japanese brokerages in Tokyo said they expected higher than usual volumes on Friday, given the previous day would traditionally have marked the start of the second half of Japan’s financial year and included the release of the central bank’s market-moving Tankan survey of business sentiment.
Ahead of the bourse opening, the TSE in a statement repeated its “sincerest apologies” for Thursday’s outage, on which the exchange’s operator has been ordered to report on to Japan’s Financial Services Agency.
The shutdown affected more than 3,000 stocks listed on markets run by TSE’s parent, Japan Exchange Group. The group is Asia’s largest operator by overall market capitalisation of listed companies and foreign investors account for about two-thirds of its average daily trading volumes and value.
The reputation of the TSE, which had worked to establish a “never close” image throughout natural disasters and other crises, has been one of the pillars of renewed attempts by Tokyo to tout itself as a global financial hub.
That push has included luring funds and other institutions that may be reconsidering their presence in Hong Kong due to tighter restrictions imposed by Beijing.
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October 02, 2020 at 12:38PM
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Japan to order Tokyo stock exchange to report on trading meltdown - Financial Times
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