Press Conference by Shozaburo Jimi, Minister for Financial Services

(Excerpt)

(Friday, February 3, from 8:53 a.m. to 9:01 a.m.)

[Questions & Answers]

Q.

Regarding yesterday's system glitch at the Tokyo Stock Exchange (TSE), a deficiency in the backup system, as demonstrated by the malfunction of the backup system, has come to light. Could you comment on that? I have one more question. Yesterday, you said that the priority is restoring the operation of the system. Am I correct in understanding that the system has completely been restored and will function normally today?

A.

Yesterday, I talked to you in a door-step interview. Yesterday, on February 2 (Thursday), the TSE reported to us that it had suspended trading in some stocks due to a system glitch that occurred that morning, and trading was resumed in the afternoon. I talked to you from 11:30 a.m. yesterday. The TSE is part of the important market infrastructure, so it is a matter of regret for the Financial Services Agency (FSA) as well that the system glitch impeded some transactions by investors.

Effective yesterday, the FSA ordered the TSE to submit a report based on Article 151 of the Financial Instruments and Exchange Act (FIEA). The TSE is required to report to us after examining the cause of the glitch and drawing up measures to prevent recurrence. The FSA Commissioner summoned TSE President Saito to convey the order. We will keep watching the situation. I hear that the system was restored at 12:30 p.m. yesterday and is functioning properly.

Q.

Around what time did the TSE report to you yesterday and by when will it have to submit a report based on the FIEA?

A.

Early in the morning, before 9 a.m., the TSE reported to us that the system was not functioning. As I mentioned yesterday, the FSA told the TSE to place priority on restoring the system. The system was restored around 12:30 p.m. yesterday. Generally speaking, an appropriate deadline is set for the submission of a report based on the FIEA in accordance with the nature of the problem. However, I would like to refrain from commenting on the details of a specific order for the submission of report. Yesterday, the FSA Commissioner summoned TSE President Saito to the FSA and conveyed the order in the evening.

Q.

Let me ask you one more question. Six years ago, a major system glitch occurred at the TSE, and another glitch took place again after the introduction of a new system. What future administrative action does the FSA have in mind?

A.

The FSA issued an order for the submission of a report based on Article 151 of the FIEA, effective yesterday, and summoned President Saito. We ordered the TSE to report to us after examining the cause and drawing up measures to prevent the recurrence of a system glitch. It is important, first and foremost, that the TSE fully investigate the case. If a problem is recognized as a result, the FSA will take necessary action.

Q.

How do you feel about the extent of the system glitch's impact?

A.

Regardless of whether investors suffered damage or not, the FSA sees it as a problem that some investors were unable to conduct transactions.

Therefore, it is important that the TSE examine the cause and draw up measures to prevent the recurrence of a system glitch, so the FSE ordered the TSE, effective yesterday, to report to us based on Article 151 of the FIEA after examining the cause and drawing up such measures. Now that the glitch has taken place, I believe it is necessary to take strict action based on law.

Thank you very much.

(End)