The Tokyo Stock Exchange will face further scrutiny over the state of its IT systems after it was forced to halt trading 20 minutes earlier than normal on Wednesday.
The trading halt came after the exchange warned during the market's lunchtime break that trading would end early should volumes reach four million during the afternoon session. At lunchtime, the number of trades had already reached 2.32 million and they hit four million at 2:25 p.m. Trading was suspended at 2.40pm.
The system is designed to handle 4.5 million trades per day. But heavy volume came on the back of fallout from allegations of wrongdoing at Livedoor, a major domestic Internet portal, plus poor results from Intel and Yahoo. The benchmark Nikkei 225 index closed down three percent - its biggest one-day fall in almost a year.
The shutdown is the latest in a string of IT systems-related problems to have hit the exchange in recent months.
In December, its software was called into question after an erroneous order to sell 610,000 shares of J-Com, a newly listed company, was accepted despite the amount being 40 times the number of issued shares.
Mizuho Securities suffered billions of yen in losses as a result of the mistaken trade, which should have been to sell a single share, and the exchange was also criticised because it was unable to cancel the transaction even when the problem was discovered.
A month earlier trading was suspended for half a day after a software patch was incorrectly applied to the market's trading system causing the system to crash. System vendor Fujitsu took responsibility for that mistake and in mid-December, after the J-Com debacle further shook confidence in the market, president of Tokyo Stock Exchange Takuo Tsurushima said he would resign.
"I think it's a pretty disastrous situation for them although it has been a disaster waiting to happen," said Noriko Hama, an economist and a professor at Doshisha University School of Management. "At least they foresaw the problem this time but the fact that the system was about to crash is a problem."
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