Tokyo Stock Exchange chief resigns over October outage

The head of the Tokyo Stock Exchange has resigned over a debacle that closed the $6tn bourse for a day in early October and earned its operator the humiliation of a business improvement order from the financial regulator.

The resignation of Koichiro Miyahara as TSE president and chief executive was announced almost two months after the shutdown, the worst outage the exchange has suffered since making the jump to a fully electronic trading system in 1999. 

Akira Kiyota, chief executive of the TSE’s owner Japan Exchange Group, told a press conference on Monday that he would take over from Mr Miyahara and also take a 50 per cent cut in salary for the next four months. Other senior executives will take smaller pay cuts or have been issued with warnings.

“The entire group will do its very best to prevent a recurrence and restore market trust,” said Mr Kiyota, whose apology echoed the language used earlier on Monday by the Financial Services Agency, which issued a number of sanctions against JPX and said the incident had risked causing “significant damage” to investor confidence.

After a series of investigations, the outage was traced to a single faulty piece of equipment that was part of the Fujitsu-built “Arrowhead” system that handles trading on the TSE. Although Mr Kiyota said JPX was not seeking financial damages from Fujitsu, he added that the Japanese technology group should feel “a strong sense of responsibility”.

The original technical fault spiralled into the full closure of the TSE and other markets operated by JPX in part because of a discrepancy between the manual supplied by Fujitsu and settings that had changed during an update to Arrowhead in 2015.

In its statement announcing the business improvement order, the FSA referred to the exchange’s assurances that it had taken countermeasures in the wake of a previous outage at the TSE in 2018. The regulator also said that while the October shutdown had been technical in origin, the exchange’s rules regarding the resumption of trading were inadequate.

The October closure, which came as Tokyo was building a new campaign to lure investors from Hong Kong and establish itself as Asia’s main financial hub, was described at the time by Japan’s finance minister Taro Aso as “deeply deplorable”.

Mr Kiyota’s apology included a reference to the terrible timing of the outage given the importance of the Tokyo campaign.