Sunday, May 19, 2024

Tokyo Stock Exchange shut; trillion dollars stuck due to one piece of hardware

The Tokyo Stock Exchange for the first time ever in history completely halted its trading after a hardware error caused a system collapse.  A data device critical to the Stock Exchange’s trading system had malfunctioned and the automatic backup couldn’t be retrieved which resulted in a full-day shutdown of the exchange.

The shutdown affected over 2,500 stocks on multiple exchanges run by regional largest operators and drew criticism from several participants and authorities.

 The complete shutdown and malfunctioning of one of the basic yet crucial hardware drew attention to vulnerabilities in the digital system of the country.

The trading halt was announced just before markets were set to open at 9:00 a.m. in Japan and later, it was informed that the exchange would remain close for the entire day.

 Financial Minister Taro Aso has released his statement over the matter and while answering to one of the reporters, he said,

“Exchanges are a crucial part of market infrastructure and it’s unacceptable that trading opportunities were denied…You’re dealing with machines, so it’s always possible they will break. They need to create the infrastructure with that possibility of a breakdown in mind.”

It was just an hour before the stock was set to open, the traders preparing at the desk some recognized the malfunction problem and reported seeing data appearing and disappearing. The rebooting of the system has caused confusion in officials and left traders in confusion.

Around 8:05 a.m., the rumours went viral on Twitter and at 8:36 an official announcement was made and securities firm were informed that the exchange will be shut down and trading will be halted.

It happened for the first time in fifteen years that the exchange had suffered a complete shutdown. The exchange received a mixed set of responses from the investors in the beginning. While some were fumed by the closure, others took it as another common delay.

However, with the passage of time, the investors become perplexed and their uneasiness was visible.

Tokyo Stock Exchange is the world’s third-largest by the size of listed companies after the New York Stock Exchange and Nasdaq.

Later in the evening, it was informed that the bourse would restart its trading on Friday. The Financial Services Agency had instructed Japan Exchange Group (JPX) and the TSE to investigate the cause of the outage and fix it.

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