The technical failure that interfered with trading on the Tokyo Stock Exchange on Tuesday stemmed from an error in a high-frequency trader's systems and exposed the relative fragility of Japan's stock market infrastructure.
The problem was first spotted by the exchange's systems department around 7:30 Tuesday morning. A large volume of messages -- data swapped between systems when logging in or placing orders, for example -- flooded onto one of the four connections linking brokerages' ordering systems with the bourse's trading servers, sparking fears of cyberterrorism.
Messages are routinely sent each morning between brokerages and customers, and between brokerages and the exchange, as the trading day begins. But this particular morning saw messages pour in at more than 1,000 times the usual rate.
Ryusuke Yokoyama, spokesman for the Japan Exchange Group, cited "a certain brokerage" as the cause, which sources said was Merrill Lynch Japan Securities. Though the company has refused to comment, remarks from sources familiar with the situation suggest the problem originated with an overseas customer of Merrill Lynch Japan who conducts high-frequency trading.
From Nikkei Asia
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