Tokyo Stock Exchange to Launch New Trading System in 2010

The Tokyo Stock Exchange plans to launch its next-generation trading system on the first business day of 2010, it said Tuesday.

The system, called 'Arrowhead,' is being supplied to the exchange by Fujitsu and will replace a system that has suffered several high-profile failures over the last few years.

Under the exchange's launch plan, which was drawn up in collaboration with CIOs from trading participants, testing of the interfaces between the new system and the computer systems at companies that trade on the exchange will begin in May next year and continue for at least six months. Then the year-end break, which includes four straight days of holidays, will be used to handle the final stages of system transition.

The new system will handle all trading of cash equities such as stocks and convertible bonds. Features of the system include an order response period of 10 milliseconds or less and back-up of trading orders and executions in a three-node back-up memory.

Before the new cash equity system is installed a new options trading system is scheduled to go into operation in the middle of 2009. That system, called T-Dex+, has been purchased by the Tokyo Stock Exchange from the London International Financial Futures Exchange (LIFFE).

The Tokyo Stock Exchange has received heat from trading participants and the government over a series of system failures in the last few years.

Problems began in November 2005 when a bug in a software upgrade caused morning trading to be scrapped. A month later Mizuho Securities suffered large losses after the computer system accepted an order that was obviously erroneous.

The biggest and most embarrassing was on Jan. 18, 2006, when trading was halted 20 minutes before the end of the afternoon session because the computer system was close to its capacity.

Since then a string of other glitches and problems have hit the bourse, including three this year.

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