Tokyo Stock Exchange Halts Trading For Entire Day Due To Technical Glitch

Japan’s huge stock market suffered an unprecedented shutdown on Thursday due to a technical glitch that caused the Tokyo Stock Exchange, or TSE, to lose an entire day of trading for the first time in history.

Regional bourses were also affected by the outage.

The disruption occurred as the Japanese government wants the TSE – the third largest exchange in the world by market cap – to help make Japan the region’s principal financial hub.

The outage also occurred on a day that traders expected especially high volumes because of the release of the Bank of Japan's Tankan survey, a closely monitored economic indicator.

The regional Nagoya Stock Exchange, Fukuoka Stock Exchange, and Sapporo Securities Exchanges – all of which use the TSE system to conduct trades -- also suspended trading activity on Thursday. (The Osaka Exchange, which uses a different system and mostly trades derivatives and index futures, operated as usual.)

TSE currently comprises more than 3,700 listed companies and a total market capitalization of $6.1 trillion.

“As someone in charge of the market, I feel responsible,” TSE President Koichiro Miyahara said. “We have caused serious inconvenience to a lot of people, and I deeply apologize.”

The TSE said the problem was caused by "a hardware failure" and that a back-up device failed. The exchange said it will replace the defective hardware and expects normal trading to resume on Friday.

The TSE uses the “Arrowhead” stock trading system, which was developed by Fujitsu Ltd. Initially launched in 2010, Arrowhead was upgraded in 2015 and 2019. TSE said it will work with Fujitsu to fix the problem.

"There should be a backup system, so it's puzzling that trading would stop altogether," a portfolio manager told Nikkei Asian Review.

But TSE said it alone was to blame for the outage, not Fujitsu.

“All the responsibility lies with us as the market operator,” Miyahara said. “Fujitsu is merely a vendor that supplies the equipment.”

Fujitsu spokesman Takeo Tanaka nonetheless apologized for the snafu and for the “inconvenience caused to the concerned parties because of a failure in the hardware we delivered.”

Ryusuke Yokoyama, chief information officer of Japan Exchange Group, which operates the TSE told reporters the malfunction was not the result of a cyberattack.

But Japan’s Chief Cabinet Secretary Katsunobu Kato raises his concerns about the incident.

“An inability to trade at the exchange, which serves as an important market infrastructure, means a restriction in trading opportunities for investors, and it is very regrettable” he said. “We want this to be investigated thoroughly so that this would never happen again. We would want it to resume trading at the earliest possible timing.”

The TSE has endured previous problems, but they never lasted for a full day. A system error halted trading one day in November 2005, but trading resumed later that same day. In January 2006, trading was halted on the TSE due to a police investigation related to a rush of suspicious orders involving shares of internet company Livedoor. Even during the tsunami-earthquake of March 2011 – tremors of which were felt in Tokyo – trading on TSE was normal.

In recent years, technical glitches have led to temporary trading halts at the New York, Frankfurt and Mumbai Stock Exchanges.

In August 2020, cyberattacks halted trading on the New Zealand Exchange for five days.