Tokyo Meltdown

Tokyo Stock Exchange by Andreas Gursky. Source: MOMA

Power outage brings rush-hour chaos in Tokyo (Reuters): An industrial accicent caused a three-hour general outage in the megalopolis that survived Godzilla. The incident either wreaked havoc on the financial markets or was taken quietly in stride, depending on the account you read.

Reports Reuters:

The Tokyo Stock Exchange was trading as usual, but calculations of the Nikkei 225-share average were frozen by early afternoon trade due to a system error related to the power cut in a spokesman at the index compiler, Nihon Keizai Shimbun said.

Individual stock prices and a series of stock indices compiled by the Tokyo Stock Exchange, including the TOPIX index, were not affected.

Foreign exchange traders at several banks said they were unable to conduct business because of computer problems.

Huh? I assume they mean that there was a power cut at the outside firm that compiles that particular index, according to a spokesman queried by that fine Tokyo newspaper.

This hedline from the Malaysia Sun pulls fewer punches: More mayhem for Tokyo markets as the plug is pulled on Nikkei average:

…. the halt in the calculation of the benchmark kept some market participants from trading actively and helped to further reduce trading volume, in a market that is often thin at the peak of the summer holidays. Trading volume yesterday fell by more than 20 per cent from Friday.

Noboru Yoshioka, general manager of the electronic media bureau at the publisher, said that he was “99 per cent” sure that the system would be back to normal at the start of trading today, but could not give a complete guarantee that the problem would be fixed.

A previous technical hitch at the Tokyo Stock Exchange caused the bourse to halt trading for almost a full day last November.

In December, the exchange’s computer systems failed to cancel a mistaken order to sell 610,000 shares for 1 yen, instead of one share for Y610,000. The slip-up cost Mizuho Securities, a brokerage firm, about Y40 billion (£182 million) and led to the resignation of Takuo Tsurushima, the exchange’s president, and two other directors. In January a flood of sell orders nearly flooded the exchange’s system and forced it to close early. It then shortened trading hours for three months.

A spokesman for Daiwa Securities Group, Japan’s second-largest brokerage, said that it had its own computer system to calculate the Nikkei average, but retail investors might have been more affected.

According to a UPI report, the central bank had to jump in and keep the afterhours interbank money markets functioning:

TOKYO, Japan (UPI) — The Bank of Japan began supplying emergency funds Monday to the interbank market after a blackout halted fund settlements.

The power failure paralyzed Tokyo`s subway system as well as much of the capital, though the Tokyo Stock Exchange, Tokyo Financial Exchange and the Tokyo foreign exchange markets all operated normally, the Mainichi Daily News reported.

The nation`s central bank injected cash into the money market, and the Japan Bond Trading Co. delayed the start of inter-dealer trading for 25 minutes to study the impact of the power failure.

There seems to be some dispute over whether the foreign currency markets were operating normally or not …