Tokyo Stock Exchange crashes!

[Taro Toporific]

Trading still suspended on Tokyo bourse
Tuesday Nov 1 13:47 AEST
The Tokyo Stock Exchange, Asia's biggest bourse, said on Tuesday it is still unsure when it will be able to resume stock trading, which was suspended before the opening due to problems with trading systems....more...

Tokyo bourse hit by worst-ever system trouble
REUTERS, Italy - 1 Nov
A computer systems failure closed down stock trading at the Tokyo Stock Exchange for most of Tuesday, the worst disruption ever for Asia largest bourse... "This is unbelievable. It almost made me laugh," said Yoshihiko Kosuga, deputy general manager at Mizuho Investors ...
A TSE official said the suspension was caused by a problem in trading system software developed by electronics maker Fujitsu Ltd. (6702.T: Quote, Profile, Research) and the bourse had no back-up solution for such software problems.

[oyajikun]

I thank the gods that I don't support traders any more. Engineers on every trading floor in Japan are now wishing for a quick death.

[Taro Toporific]

Trading still suspended on Tokyo bourse
Tuesday Nov 1 13:47 AEST

Note: It has been down ALL day from the start and convertible bond trading is totally dead.

TSE to resume stock trading at 1:20 p.m.
Kyodo News TOKYO, Nov. 1
Tokyo Stock Exchange Inc. said Tuesday it will resume stock trading -- suspended since before the opening due to a system malfunction -- at 1:20 p.m.
Trading of convertible bonds, however, will remain suspended, the company said.
The trading system could not be booted up early Tuesday, for reasons yet to be determined, and some 2,400 stocks and about 120 CBs could not be traded, a senior TSE official said.

[Taro Toporific]

I thank the gods that I don't support traders any more. Engineers on every trading floor in Japan are now wishing for a quick death.

The exchange has tiny glitches all the time because of the mega-funky linking of 2-byte Japanese systems and the rest-of-the-world's systems. Whenever the Tokyo Stock Exchange goes down for more than 10 minutes, the exchange officials and computer venders have to make formal report to the Japanese Diet. I've worked on a few of those reports from the network switching end...and let me say the reports are paradigms of pure vagueness, smoke, mirrors, and lots of groveling.

[ichigo partygirl]

i wondered why and unusually larger number of people with nothing better to do were standing around glued to the stock exchange screen at yokohama station

[Mulboyne]

The TSE used to hold a half-day session on Saturdays, presumably to ensure that no-one could have a social life, which was always good for a few crashes.

One little noticed event today is that the value of all stocks listed on the First Section of the TSE (all companies included in the TOPIX index) exceeded 460,000,000,000 yen for the first time since late 1990. This might seem a little odd since the index itself is only at a four year high but it reflects the fact that there are more listed companies now than 15 years ago. We last approached this level during the internet boom but now we've gone through it. There is a lot of money tied up in stocks again.

[omae mona]

Mr. Amano said the glitch stemmed from errors in the trading system's software programming, which the TSE upgraded in late October as part of an effort to bolster the system to handle higher trading volumes. The TSE moved some data in the system to a new location but didn't properly reprogram the software to access the data in its new place, resulting in the mishap.

Impressive. Nice to know a little programming bug that renders the whole exchange useless can't be caught during testing, or fixed in less than 7 hours.

[Greji]

Mr. Amano said the glitch stemmed from errors in the trading system's software programming, which the TSE upgraded in late October as part of an effort to bolster the system to handle higher trading volumes. The TSE moved some data in the system to a new location but didn't properly reprogram the software to access the data in its new place, resulting in the mishap.

Impressive. Nice to know a little programming bug that renders the whole exchange useless can't be caught during testing, or fixed in less than 7 hours.

IT guys and gals cementing job security. Like if we're not here the system can't operate datte!
iin jyanai!

[oyajikun]

Mr. Amano said the glitch stemmed from errors in the trading system's software programming, which the TSE upgraded in late October as part of an effort to bolster the system to handle higher trading volumes. The TSE moved some data in the system to a new location but didn't properly reprogram the software to access the data in its new place, resulting in the mishap.

Impressive. Nice to know a little programming bug that renders the whole exchange useless can't be caught during testing, or fixed in less than 7 hours.

IT guys and gals cementing job security. Like if we're not here the system can't operate datte!
iin jyanai!

Ontday etlay ethay atcay outway ofway ethay agbay!

[Neo-Rio]

Whenever the Tokyo Stock Exchange goes down for more than 10 minutes, the exchange officials and computer venders have to make formal report to the Japanese Diet. I've worked on a few of those reports from the network switching end...and let me say the reports are paradigms of pure vagueness, smoke, mirrors, and lots of groveling.

The problem is, I think, is that the Japanese tend to waste a ton of effort making sure that everything is absolutely perfect. I know this from my own experience. They're never satisfied with any one configuration and they're constantly changing their minds because they can't decide on anything.

The problem occurs when they blast a lot of time trying to create something perfect, or something incredible way beyond support or spec limitations, rather than something that is simple, understandable, and "just works".

Eventually they run out of time to do the job, have to overwork for days on end, skip a lot of the testing, and end up doing a botched job.

[cstaylor]

Impressive. Nice to know a little programming bug that renders the whole exchange useless can't be caught during testing, or fixed in less than 7 hours.

The Japanese IT industry doesn't have a separate field dedicated to QA, so you usually have programmers doing the testing (bad idea).

[dingosatemybaby]

Meh. Why even bother with the TSE - it's just a lagging indicator for Wall Street: "Nikkei up on Wall Street," "Tokyo Down on Dow Pessimism."

[Mulboyne]

Forbes: Japan's Nagoya stock exchange resumes trading after technical glitch
Just three days after the Tokyo Stock Exchange suffered its worst-ever system crash, a regional Japanese bourse in Nagoya was also forced to suspend trading for several hours today due to technical problems. The Nagoya Stock Exchange in central Japan finally resumed trading at 12.30 pm after a system malfunction forced the bourse to announce a suspension just before dealing was due to begin at 9.00 am

[IkemenTommy]

Nagoya had a stock exchange
I learn new things every day on here.

[Taro Toporific]

I didn't know Nagoya had a stock exchange

Trading In Japan's Nagoya Bourse11-04-05 12:38 AM EST, TOKYO -(Dow Jones)-
....The Nagoya bourse is the third biggest stock exchange in Japan, but turnover on the bourse worth Y659.1 billion in 2004 was dwarfed by the TSE's Y343.1 trillion, according to data from the bourses. That amount makes up a scant 0.2% of the entire stock turnover on five stock exchanges in Japan.
...The bourse resumed trading at 0330 GMT, but said it still doesn't know what caused the problem....
Fujitsu Ltd. (6702.TO), which made and services the TSE's trading system, also helps manage the Nagoya bourse's system. The latest shutdown came after several glitches, including shutdowns in July 2004 and February 2002, since Fujitsu launched the current system in September 2000....

[Charles]

The Register: Fujitsu execs take pay cut after Tokyo exchange crash
Humble apologies
Fujitsu is to dock the pay of senior executives after the Japanese computer giant took the blame for a software glitch that forced the Tokyo Stock Exchange (TSE) to suspend trading earlier this month. The exchange was only able to operate for 90 minutes on 1 November due to bugs with a newly installed transactions system, developed by Fujitsu, which was supposed to help cope with higher trading volumes. The interruption in trading was the worst in the history of the exchange.
"Flawed instructions we received from Fujitsu regarding system improvements to its software seem to have caused the glitch," TSE spokesman Mitsuo Miwa told Reuters. The news agency reports that the exchange is yet to decide whether or not to sue Fujitsu over the outage. Nagoya Stock Exchange experienced a similar trading halt three days after the TSE glitch, which have also been traced back to Fujitsu software.
In a show of humility over the cock-up, Fujitsu's board has agreed to slash president Hiroaki Kurokawa's salary in half for six months, and levied pay-cuts of between 10 to 25 per cent on other senior executives including those running its financial systems division. Tokyo Stock Exchange has already imposed a similar set of pay cuts on its executives right down to slashing the monthly pay of President Takuo Tsurushima by half for six months. It's unclear if Fujitsu will plough the cost savings from its salary cuts into its own business or hand over the dosh to Tokyo Stock Exchange.

[Mulboyne]

I really wouldn't want to be the trader responsible for this. I don't think Mizuho has paid bonuses yet...

Bloomberg: Mizuho Says Typing Error Sparked $3.5 Billion in J-Com Trades
Mizuho Securities Co., the brokerage arm of Japan's second-biggest bank, said a typing error by its trader sparked $3.5 billion of share trades in J-Com Co., a company valued at $93 million. "We deeply apologize to investors, the issuer and other people for having caused such a huge problem," Makoto Fukuda, 59, Mizuho Financial Group Inc.'s trading unit president, said at a press conference...bowing deeply. More than 700,000 shares in J-Com changed hands in its stock market debut, making the stock the most active by value on the exchange. The Osaka-based telecommunications company sold 2,800 shares in its initial public offering earlier this month, representing a fifth of the outstanding stock. Fukuda said the error has cost Mizuho 27 billion yen ($224 million) in unrealized losses, and that the amount may rise further. At 9:27 a.m...Mizuho's brokerage wrongly put an order to sell 610,000 shares for 1 yen each, he said. It had intended to sell 1 share for 610,000 yen for a client...more...

[Mulboyne]

Kyodo via Japan Today: Mizuho Securities to incur Y40 bil loss

TOKYO — Mizuho Securities Co is expected to incur 40 billion yen in losses from its erroneous order of J-Com Co shares as the Tokyo Stock Exchange's clearing unit said Monday it will force the brokerage house to settle unexecuted buying orders with cash payments. The so-called "forced cash settlement," which will be employed for the first time in 55 years in Japan, comes in the wake of the admission Sunday by the world's second-largest bourse that defects in its computer system were partly to blame for escalating the disruption caused by Thursday's erroneous trading orders by Mizuho.

What is missing from this story is who is on the other side of the transaction. That is, Mizuho could only have sold the shares at a silly price if someone bought them. It's fairly likely that a few foreign brokers have had a Merry Christmas at Mizuho's expense.

[cstaylor]

Here's what I don't understand: classic transactional programming would not allow this to happen (if you don't confirm, rollback).

If I'm understanding the news reports, the trader placed an order and couldn't cancel it due to an error. What was unclear is if the failure occurred during the placement of the order of trying to revoke an existing order.

[amdg]

What is missing from this story is who is on the other side of the transaction. That is, Mizuho could only have sold the shares at a silly price if someone bought them. It's fairly likely that a few foreign brokers have had a Merry Christmas at Mizuho's expense.

Possibly stupid question - Isn't it possible to find out who the buyers were?

[dingosatemybaby]

[Mulboyne]

When UBS first made a similar error (switching the shares/price on an order for an IPO stock - they did it with Dentsu) it was vaguely understandable although still crazy. Every stock in the market has a limited maximum daily gain and maximum daily loss so, if you attempt to input a price outside those limits, you'll get kicked back. On the first day of trading of an IPO, however, there used to be no such limit (because there was no established traded price on which to base the limits). Although the UBS order should have been cancelled by the exchange, it was at least possible to trade at the input price

This case, though is mad. The order got through Mizuho's own trade input system, through the TSE's system and under the noses of the market regulators who are supposed to monitor such unusual trades Having got through, four attempts to cancel it failed (cstaylor - the original order was an error and the cancellation procedures failed everywhere)

Isn't it possible to find out who the buyers were?

It used to be possible in a brokerage house to see immediately which member broker had traded shares in a particular issue (the teguchi). This information would be updated after every transaction. Institutional investors successfully lobbied to restrict this data because it was easy to see if one broker was buying heavily on their behalf and day traders would exploit that. We can only learn much later which broker was buying. Additionally, because so many people input their orders directly now (not by telephone or email), it's not certain whether the brokers on the other side were using their own capital or processing the quick response of their direct access clients.

What was also interesting was finding out that...there are J-day traders. I had thought commissions in Japan were so high that day trading, or anything other than buy-and-hold really, was generally the province only of institutions in Japan.

Commissions have been deregulated for a good number of years now. Some hedge funds and day traders have in fact begun to pay higher rates in order to guarantee "the first call". Among its many customers, Matsui Securities has around 30 regular day traders who trade in such heavy volume they each generate over a million dollars in commissions a month. That is just breathtaking.

[Mulboyne]

The Japan Securities Clearing Corporation has obliged Mizuho to buy back the J-Com shares it had sold at 572,000 at a price of 912,000 (which assumes two "limit-up" days of 200,000 yen each). So, for every share sold, Mizuho stands to lose 400,000 yen.

When Mizuho input the order to sell 610,000 shares at 1 yen, the reason they couldn't cancel the order is that the TSE system had automatically converted the price to 572,000 yen (the limit down price on the day) and so didn't recognize the attempt to cancel an order to sell at 1 yen. To protect themselves, Mizuho did input a massive buy order to limit the damage and managed to get over 400,000 shares. Funnily enough, the buy order was clearly illegal but nobody is bothering with that issue amidst the chaos. Since all the talk is of a 40 billion yen loss, we can assume that Mizuho was left short of around 100,000 shares.

Mizuho management, on the day, approached the 18 brokers who were the counterparties for the remaining shares that they hadn't been able to repurchase. 15 agreed to cancel their transactions but three companies refused. Since the decision had to be unanimous, the trade had to stand.

The Asahi (Japanese) is suggesting that the Swiss bank UBS, which stands stands to make over 12 billion yen in profit since they bought 30-40,000 shares, is part of a group which is considering ways to "hand back" part of the profit although the article could just as easily be part of an attempt to get them to do just that.

I don't think any of this is likely to help the TSE make the case for going public themselves.

[Mulboyne]

Reuters: Japan TSE, Korea Exchange say merger a future option

The Tokyo Stock Exchange and the Korea Exchange said on Friday they may consider a merger or cross-shareholdings in the future to boost competitiveness, adding to a growing trend among bourses around the world to team up... "We may consider holding talks on partial cross-shareholdings in each other," TSE Chairman and President Taizo Nishimuro told reporters on Friday. "We don't want to rule out any possibilities from the start." Still, he added: "It is not outside the realm of possibility that we may one day finally do a merger, but I have to say the hurdles are too high to clear (at the moment) because of laws in both countries"...more...

[omae mona]

[Catoneinutica]

UBS Makes 3 Trillion Yen Mistaken Order, TSE Says (Update1)

Sheeeit, those playa-haters at Justice gots UBS all f*ckin' up n' sh*t!

http://www.nytimes.com/2009/02/24/business/24ubs.html?ref=business

-catone
-UBS is going to be getting all Edouard Stern on some asses before this is over

[Taro Toporific]

[floatl][/floatl]

An employee of Tokyo Stock Exchange watches a stock index board at its trading room in Tokyo February 24, 2009. Japan's Nikkei average slipped 1.5 percent on Tuesday...Reuters-Daylife photo

[Mulboyne]

The Tokyo District Court has ordered the Tokyo Stock Exchange to compensate Mizuho Securites to the tune of 10.7 billion yen. Mizuho had claimed damages of 41.5 billion yen after sustaining substantial losses following an order inputting error. The broker realized their mistake but were unable to cancel the order owing to deficiencies in the TSE's systems. Mizuho said that not only did the TSE not recognize the cancellation, the exchange then allowed trading to proceed when there was clearly a major anomaly which warranted an intervention (instead of selling 1 share of J-Com stock at 610,000 yen, Mizuho offered 610,000 shares at 1 yen). The TSE responded to the claim by pointing out that Mizuho bore responsibility for making the mistake in the first instance.

The fuss caused by this incident led to the resignation of the head of the TSE and a business improvement order from the FSA to both. Arbitration failed to reconcile the two parties so Mizuho elected to take legal action. Neither side was immediately available for comment.