The Tokyo Stock Exchange (TSE) has outlined plans for improvements to its trading platform following a malfunction to its derivatives order book information distribution system last month. This latest problem was caused by a software bug introduced during an upgrade.
The TSE said it “deeply regrets” allowing three separate system malfunctions to occur within the span of the six months.
“The TSE will tirelessly strive to further bolster market fairness and reliability by promptly examining and steadily implementing preventative measures to ensure a malfunction like this does not occur again in the future,” said a statement released by the exchange.
The exchange aims to complete six measures by the end of September, including the establishment of a special mission project team assigned to the chief information officer (CIO), a review of the TSE’s test process flow, enhancements to its system recovery plan, and external system audits.
The CIO special mission project team will be made up of those in charge of the derivatives trading system. According to the TSE, the team will have dispensation to consider responses to system malfunctions “without being preoccupied with existing rules and framework”.
In addition, development vendors for the exchange will check all programs to ensure a similar glitch does not occur, review the identification criteria for testing patterns and set up a quality control team to span all teams within its remit. The TSE has also said it will create a system for reviewing products provided by the development vendor and will use Fujitsu, an IT solutions provider, as a third-party process control team for re-inspections.
The exchange will also extend its consulting contract with US exchange NYSE Euronext to investigate its methodology and approach for responding to future malfunctions.
Furthermore, TSE has taken disciplinary action against some of its most senior executives as a result of the latest failure, including 30% pay-cut for chairman chairman Taizo Nishimuro and CEO Atsushi Saito for one month, and a 20% salary reduction for COO Yasuo Tobiyama and CIO Yoshinori Suzuki for one month.
The latest malfunction occurred on 22 July after a coding flaw was not identified following performance improvements the previous day. The problem was not discovered despite numerous tests, which led to a suspension of trading until 13.45.