Japan’s financial watchdog has ordered the Tokyo Stock Exchange to improve operations

2 In a photo taken on October 20, 2020, the Tokyo Stock Exchange is shown. Bourse reopened normally on the same day after trading in all stocks had closed for the entire session the previous day due to a system defect. (Kyodo) == Kyodo

Japan’s financial watchdog Tokyo Stock Exchange Inc. on Monday. And issued a business reform order to its parent company, suspending unprecedented full-day trading following a system failure in October.

With this order, the Financial Services Agency hired the boss operator and its owner, Japan Exchange Group Inc. The pressure on increased. Taking steps to restore international confidence after the October 1 blockade, the worst in Tokyo market history.

TSE President and CEO Koichiro Miyahara resigned to take responsibility for the outage. At a press conference, JPX CEO Akira Kyota said his monthly salary would be halved for four months and promised to prevent a recurrence of such failures.

The directive to take steps to curb duplication comes at a time when Prime Minister Yoshihid Suga is trying to boost Japan’s position as a global financial center while trying to attract more investment from abroad.

It demanded that both companies clarify their responsibility for the problem and submit a plan on how they would improve performance.

The agency said it would regularly monitor progress on the basis of the plan. FSA officials said in a press conference that the order had to be issued in view of the severity of the impact of the failure on Japan’s capital markets.

Prior to placing the order, the agency examined reports submitted by the exchange group and conducted on-site inspections on both companies from 23 October.

Closed full day, the first to fully computerize the Tokyo Bourse business in May 1999, stopped trading in all equities listed on stock exchanges in Sapporo, Nagoya and Fukuoka.

This is the fourth time that the TSE has received such an order through financial supervision. The last one was issued in August 2012 after a system malfunction that led to a temporary suspension of all derivatives trading.

This was caused by an error in the latest shutdown settings, which prevents automatic backups from being activated after a memory failure in TSE’s trading system. Even the shutdown betrayed the inability to resume trading on an immediate basis in the event of an untoward incident.

The settings error was blamed on an old manual provided by Fujitsu Ltd., the developer of the “Arrowhead” trading system, but TSE said it was responsible for the outage as it was the market operator.

As a precautionary measure, Bosser, which trades about three trillion yen ($ 29 billion), has set up a panel of market professionals to work out new rules by March on how to resume trading following the shutdown.

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