Friday, January 20, 2006

Tokyo Stock Exchange Closes Early

Securities Industry News: " The problem-plagued Tokyo Stock Exchange (TSE) had to shut down again today as trading volume piled up faster than computer systems could handle it.

It was the latest and perhaps most far-reaching of a string of operational failures and embarrassments dating back to November that resulted in a number of firings and salary reductions at the TSE's staff level--raising questions as to whether the exchange had lost critical expertise for dealing with its problems.

Addressing Wednesday's incident, which resulted in a halt to trading of all equity, convertible bond and exchange bond issues 20 minutes ahead of schedule, TSE acting president Taizo Nishimuro said, "There was a possibility that the number of orders and executions received would exceed the amount able to be processed by the system."

The exchange had determined that if its number of orders goes above 8.5 million a day or the number of executions hits 4 million, then processing problems would start to occur. As of 2:25 p.m. it had processed about 7 million orders and 4 million executions. The announcement at around 2:00 that it would close at 2:40 set off a near-panic rush exacerbated by news of a criminal fraud investigation of Livedoor, a high-flying Internet services company, which led a 2.9 percent plunge in the Nikkei 225 index, the worst since May 10, 2004."

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