Tokyo bourse to begin new restart rules in April after worst outage

© Kyodo News

Tokyo Stock Exchange Inc. on Thursday unveiled new rules for swiftly restarting trading in the event of a suspension, as the lack of such guidelines puzzled many investors during an unprecedented all-day system outage last year.

According to the rules to be put in place next month, the Tokyo bourse operator will resume trading after a system problem even if not all market participants are reconnected to its trading system provided certain levels of trade volumes are secured with brokerages able to restart among about 90 securities houses linked with the system.

The rules compiled by a TSE panel of outside directors and market professionals will be implemented on April 26, after the Financial Services Agency issued a business improvement order in the wake of a system failure on Oct. 1 that caused the worst outage at the world's third-largest bourse with about 3,700 companies listed.

Due to a failure in automatically switching over to its backup system, the day-long stoppage, which also suspended all trading of equities listed on stock exchanges in Sapporo, Nagoya and Fukuoka, was a setback for the TSE, which plans to reorganize its trading sections to entice more investors.

Under the new rules, trading will restart manually, when the backup system fails, after the bourse confirms that securities houses with a combined trading share by value of 50 percent or more and at least five brokerages serving retail investors with an aggregated share of 30 percent or more are able to trade again.

Orders placed prior to a suspension will be canceled when it becomes necessary to reboot the system. When the outage occurred in October, the TSE could have switched to the backup server manually but did not do so out of concerns that orders would have been canceled.

The TSE decided on these measures as similar steps have been introduced in New York, London and other stock markets, the Tokyo bourse said.

Once the system is back up, traders will be guaranteed 15 minutes for re-placing the orders and another 15 minutes for trading.

The TSE will continue discussing whether the market close should be extended from the current 3 p.m. when trading resumes with less than 30 minutes left in the trading day.