Tokyo Stock Exchange Head Resigns Over System Failure

The head of the Tokyo Stock Exchange (TSE) stepped down over a system failure last month, the bourse’s operator said on Monday, after the disruption halted trade for an unprecedented full day and drew a rebuke from the regulator.

Akira Kiyota, the head of Japan Exchange Group Inc, which owns the exchange, will take over as head of the TSE, replacing Koichiro Miyahara who stepped down on Monday as president and chief executive.

Miyahara appears to be the first CEO to resign following a run of outages at major exchanges in Australia, Europe and New Zealand this year. Japan’s financial regulator ordered the TSE and Japan Exchange Group to improve practices at the bourse.

The Oct. 1 outage came as Japan has been pushing to boost Tokyo‘s standing as a global financial centre. The glitch was also an embarrassment for Fujitsu Ltd, which developed the bourse’s “Arrowhead” trading system.

“It is regrettable that this happened at Japan’s main exchange at a time when Japan is aiming to improve its standing as a global financial centre,” Kiyota told a news conference after apologising and saying he felt responsible.

He said the company was not thinking of seeking damages from Fujitsu, but said the system developer should also feel “significant responsibility”.

Kiyota will take a 50% pay cut for four months, while two other executives will take cuts of 20% and 10%, Japan Exchange Group said. The company said it issued “stern warnings” to two other executives.

Fujitsu said it was discussing taking internal disciplinary action, but that nothing had been decided.

“The all-day trading halt at the Tokyo bourse significantly undermines investors’ trust,” the Financial Services Agency said in a statement, saying the exchange needed to clarify where responsibility lay.

The full-day trading halt was the worst outage for the world’s No. 3 equity market since it switched to all-electronic trading in 1999. The exchange has said the glitch was the result of a hardware problem at the “Arrowhead” trading system and a subsequent failure to switch to a back-up.

Through an onsite inspection, the regulator determined that the TSE lacked adequate back-up settings and sufficient rules for trading resumption, Japan Exchange Group said.

The regulator also ordered the TSE to improve and test its back-up measures, the company said.

The TSE has said a committee was due to draw up fresh guidelines by March on how to restart trading following a system failure.

Reuters