Outage freezes Tokyo Stock Exchange, world’s 3rd largest

Trading on the Tokyo Stock Exchange, the world’s third largest by market capitalization, was halted all day due to a technical failure but officials said they were working to restore normal trading by Friday

TOKYO — Investors in Japan and elsewhere were left scratching their heads Thursday after trading on the Tokyo Stock Exchange, the world’s third largest by market value, was halted for the day due to a technical failure.

Tokyo Stock Exchange officials said they were working to restore trading by Friday. There was no indication that the outage resulted from hacking or other cybersecurity breaches.

A hardware failure caused a malfunction in the backup device meant to kick in if there was a technical problem. As a result, “market information could not be distributed,” the exchange said.

The officials characterized the problem as a memory malfunction.

“TSE is currently planning to replace the hardware and taking steps, including other maintenance, to ensure normal trading from tomorrow onwards,” it said.

Rebooting the system during a trading session would have caused confusion for investors and other market participants, the officials told reporters.

“We are deeply sorry for the inconvenience,” said TSE President Koichiro Miyahara.

The Japan Exchange Group is the world’s third largest bourse after the New York Stock Exchange and Nasdaq, with market capitalization of nearly $6 trillion.

Previous outages occurred when the “arrowhead” system created by Fujitsu to handle its electronic trading became overwhelmed with too many orders at one time.

That’s what happened on Oct. 9, 2018, according to a release on the TSE’s website. But during that disruption, some backup systems for trading continued to function as was the case in earlier outages.

The exchange promised to investigate, conduct malfunction tests and change the system to ensure that a flood of orders would not cause the entire system to stop working. Several top executives of the exchange were penalized.

The outage Thursday also affected other, smaller stock exchanges in Japan.

Foreigners account for about 70% of all brokerage trading in the Tokyo exchange, both in terms of value and volume, so news of the outage left investors both in Japan and overseas wondering what happened.

“I think it is very regrettable that investors are limited in their trading opportunities because they cannot trade on the exchanges,” said Katsunobu Kato, the chief cabinet secretary.

He said the Financial Services Agency had instructed the Japan Exchange Group and Tokyo Stock Exchange to investigate the cause of the outage and fix it.

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Kurtenbach reported from Mito, Japan.