A morning outage at the Tokyo
Stock Exchange (TSE) has demonstrated shortcomings in the way venues are
regulated in Japan and deprived investors of a choice of back-up venue for
trading, alternative venues have suggested.
The outage, which hit 241
names on the TSE, lasted from 09.00 to 12.30 local time and was blamed by
the bourse on “troubles on the market data/market information distribution”.
But while self-regulatory
organisation the Japan Securities Dealers Association (JSDA) – tasked with
making the call on halting alternate venues from trading certain instruments in
irregular market conditions – froze the 241 stocks on the country’s proprietary
trading systems (PTSs), it allowed the Osaka Stock Exchange (OSE) to continue
“Situations like to today do
not benefit any member of the trading community,” said Yasuo Hamakake, representative
director of PTS Chi-X Japan. “Events like this remind us that through greater
competition comes market reliability and increased capacity benefiting all
According to newswire
reports, an error was detected at around 08.00 in a server connected to TSE’s
Flex information transmission system and the JSDA halted trading PTSs soon
Hamakake voiced concerns that
a proposed TSE and the OSE merger would cause further market constraints for
PTSs. “We need to examine the rules that exist today to ensure that PTSs and exchanges
can operate on fair and level playing field.”
The merger between TSE and
OSE was announced 22 November and is currently slated for January 2013.
Today’s breakdown occurred during
one of the busiest times in the Japanese results season. Yesterday, national
mainstay Sony posted a US$1.2 billion quarterly loss and Hitachi announced a
45% fall in Q3 net profits.
was unfortunate timing, with some major announcements from issuers. We were
anticipating active retail participations in the market. If the TSE closes due
to market data issues, we’d seriously contemplate on closing too,” said Chuck
Chon, CEO of PTS SBI Japannext. “Liquidity
providers of PTSs depend on the primary exchange for pricing.”
In January, SBI Japannext
remained the largest PTS in Japan, growing market share to 3.24% of Japanese
stocks, from 2.88% in December, while Chi-X Japan increased market share from
2.22% to 2.65%.
The exchange’s Arrowhead
trading platform, which was introduced it at beginning of 2010, was not the
cause of the failure, a TSE spokesperson said.