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TSE hit by series of system troubles. It officials are increasingly distrustful of Fujitsu

8, 22. 2008

   The Tokyo Stock Exchange (TSE) is being hit by a series of system troubles. Such troubles have already occurred three times since the beginning of 2008. The TSE has come under criticisms as an official at a major securities house noted that the TSE has lost the trust as a securities exchange market. Atsushi Saito, President and CEO of the TSE, revealed at a regular press conference on July 29 that a special project team has been formed to work out measures to prevent the recurrence of the troubles. According to some officials of the TSE, however, the causes of the recent troubles are "careless mistakes of the program." As the weak points regarding the system have been revealed, the feeling of distrust among the officials involved is intensified toward the next-generation system the TSE is planning to install and the company which is developing the system.

Simple mistake by system developing company

TSE hit by series of system troubles
TSE hit by series of system troubles
"I deeply apologize to the investors and market players for causing the troubles to them."

   This is an apology made by Saito at the July 29 press conference referring to the trouble that occurred on July 22. The project team is made up of former system developing company staff members. Its purpose is to sort out the elements of the troubles and work out measures to prevent the recurrence of the troubles.

   The trading of stocks, national bond futures and options was temporarily stopped in the latest trouble. On July 22, the first day of the trading using the system with renewed software, difficulty was found out in sending information on trade movements to securities houses. As the difficulty could not be solved, the trading was suspended as of 9:21 a.m. The trading was resumed at 1:45 p.m. after the renewed software was replaced with the old one.

   The TSE had conducted test operation of the system on July 19 and 20, but no flaws were detected in the test operations. It was reported that the cause of the latest trouble was typing the figure "4" in the place a four-digit figure that was supposed to have been punched in. An official of the TSE said he could not deny the TSE was held accountable for being unable to detect the mistake. But he added the mistake could be of such a nature that that only a beginner could make.

Too great a risk to change system developing company by one blow

   The system developing company is Fujitsu Ltd. Because of troubles, officials inside the TSE are increasingly distrustful of Fujitsu. The system engineer (SE) of financial institutions is suffering from chronic manpower shortages making it difficult to maintain the SE at a sufficient level. But some of the TSE officials have strongly expressed their opinion that Fujitsu should be replaced with a different system developer.

   Fujitsu, however, is the company that developed the basic system of the TSE, and it is taking part in the development of the next-stage system. Reflecting on this situation, Saito said at the press conference that it would carry a big risk to change the system developing company by one blow. "There is no guarantee that newly selected developing company would be reliable," he added, indicating he had no intention of changing the developing company. TSE officials said Saito was extremely angry with Fujitsu. "But he avoided a major distortion that might occur by switching the system company," one of the officials said.

   The TSE is making effort for the introduction of the next-generation system, but the reliability of the new system is doubted. The TSE is planning to list itself next year, but the plan may have to be changed if the troubles continue. A ranking official of the TSE said that the TSE has revealed to the world that its system, the very base for conducting of trading, is a weak spot.

   The TSE has suffered a major damage to its reputation because of the system troubles.

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