Is Fujitsu responsible for Tokyo Stock Exchange’s hardware failure?

Tokyo Stock Exchange (TSE), the world’s third-largest stock market, has shut down trading on its platform following a hardware failure, Reuters reported.
Fujitsu for IT transformationFujitsu, which developed the trading system, said it was investigating the problem. Fujitsu in 2019 said TSE has completely overhauled its “arrowhead” trading system for the first time in four years, leveraging the latest technology from Fujitsu to enhance functionality and improve performance.

TSE said the outage was the result of a hardware problem at its “Arrowhead” trading system, and a subsequent failure to switch over to a backup device.

TSE “arrowhead” trading system is a world leading solution that delivers high performance and reliability, offering users the power of a large-scale mission critical system that combines a variety of cutting-edge technologies, Fujitsu said.

Fujitsu Software Primesoft Server, Fujitsu’s in-memory data management software, enables nanosecond-level ultra-high-speed data access by storing all data necessary for processing in memory, providing high response and throughput performance.

The TSE was prone to technical troubles in the past and was notorious for sluggish trading, though there have been fewer glitches since a new system was adopted in 2010.

The TSE’s first full-day suspension since it began all-electronic trading in 1999 left investors searching in vain to buy back shares after the first U.S. presidential debate.

“I feel painfully responsible for all the confusion this incident has caused for investors and market participants,” TSE Chief Executive Officer Koichiro Miyahara told a news briefing.

The development raises questions over the exchange’s credibility just as Japan’s new Prime Minister Yoshihide Suga makes digitalisation a top priority and could dent Tokyo’s hopes of attracting more banks and fund managers from Hong Kong amid concerns over a new security law imposed by China.

Tokyo Governor Yuriko Koike said a quick fix was crucial to ensure trust in the roughly $6 trillion market, which ranks behind New York and Shanghai, data from the World Federation of Exchanges shows.

Smaller regional bourses in Nagoya, Fukuoka and Sapporo were also forced to suspend trade because they use the TSE system, leaving derivatives-focused Osaka Exchange as the only equity market still running in Japan on Thursday.

“There will be a huge surge in trading volumes around the U.S. presidential election, and this does raise some concerns about the TSE’s ability to process a large increase in orders,” said Hideyuki Ishiguro, senior strategist at Daiwa Securities.

While Tokyo has been eclipsed by Shanghai’s market in recent years, it is still a global hub for foreign investors. The volume of shares traded on the TSE’s main board .TOPX was an average of 1.13 billion in the past 30 days.