Tokyo market chief quits over ‘fat finger’ trade By Mariko Sanchanta in Tokyo Published: December 18 2005 21:09 | Last updated: December 20 2005 08:36
The president of the Tokyo Stock Exchange resigned on Tuesday to take responsibility for a botched ¥40bn ($345m) trade that tainted the reputation of Asia’s largest exchange.
Takuo Tsurushima, along with two other directors, would be stepping down, while Chairman Taizo Nishimuro will serve as president for the time being, the TSE announced after a board meeting on Tuesday.
Mr Tsurushima, 67, has been at the helm of the world’s second-largest bourse since April last year. His resignation has been predicted following the botched trade which highlighted serious shortcomings in the exchange’s trading systems.
The exchange was unable to cancel an erroneous sell order, which resulted in an estimated loss of ¥40bn for Mizuho Securities, the brokerage arm of the Japanese financial services group, which the exchange initially blamed entirely on Mizuho Securities.
Earlier this month, Mizuho Securities mistakenly tried to sell 610,000 shares in recruitment company J-Com at ¥1 apiece instead of one share at ¥610,000. The brokerage house said it had tried, but failed, to cancel the J-Com order for four times.
The TSE later admitted that a fault in its system had prevented the Mizuho trader from cancelling the order after realising the mistake, and Mr Tsurushima said he might resign.
The TSE’s operations were already called into question last month, when it suffered the first total shutdown in its 56-year history after poor communication between different parts of the exchange’s IT operations.
The shutdown raised questions about the exchange’s back-up system and its ability to handle the much higher trading volumes that have accompanied the market’s recent strong performance. The TSE said the shutdown was unrelated to recent trading volumes.
In the aftermath of the Mizuho incident, Mr Tsurushima underlined the gravity of the situation by saying he would make a judgment about “my own fate”.
The two directors who also stepped down were Sadao Yoshino, senior managing director, and Tomio Amano, managing director.
The TSE also said Tuesday it would cut the monthly pay for two directors and four executive officers by 10 per cent for three months, beginning January.
Meanwhile, the brokers that cashed in on the trading error are in dispute over how to handle the profits, according to people close to the matter. Several Japanese brokerages are refusing to repay the profits, angering the six big investment banks - UBS, CSFB, Lehman Brothers, Morgan Stanley and Japan’s Nikko Cordial and Nomura - who have already agreed to repay the funds.
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