The Financial Services Agency is planning to conduct an on-site inspection of the Tokyo Stock Exchange following a full-day outage earlier this month, sources close to the matter said Monday.
Earlier in the day, the bourse operator said it will launch a major overhaul of its systems and set up a panel aimed at creating new rules on how to resume trading in the wake of a suspension.
The agency will likely decide what to do with the bourse after assessing the findings from its inspection, with an eye to issuing business improvement orders.
The bourse said it and securities companies will hold drills for switching to a backup system based on the scenario that a serious technology glitch occurs, while also conducting thorough inspections of the current system settings.
"Problems were found not only in the systems but also in operations, including criteria and steps toward trading resumption," Tokyo Stock Exchange Inc. Executive Officer Hiroki Kawai said in a press conference to explain the latest situation on its internal probe.
"We aim to make the systems more resilient based on the premise that a glitch occurs," he said.
The panel will consist of various market participants including securities houses, investors and system vendors. The first round of discussions will be held by the end of this month and the TSE said it aims to create new rules by the end of March.
The bourse said in recent press conferences that the memory capability of a server in its trading system stopped functioning and its auto-backup system also failed due to a settings error.
The TSE disclosed Monday one of the settings was altered in 2015 when the "arrowhead" trading system was updated, but the bourse was unable to recognize the change as it was not reflected in the manual provided by the system's developer Fujitsu Ltd.
The TSE said, however, it has no plans to seek compensation from Fujitsu, adding it expects the developer to implement improvement measures.
TSE and its parent Japan Exchange Group Inc. submitted a report Friday on the cause of its system failure and preventive measures to the Financial Services Agency.
The TSE suspended trading of all listed stocks on Oct. 1 for an entire day for the first time since its trading system was fully computerized in 1999. It resumed normal trading the following day.
Trading did not restart within that day as it could cause further disruption to market participants. The resumption required an entire system reboot that would affect orders already placed.
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