Press Conference by ASO Taro, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services
(Friday, October 2, 2020, 11:56 am to 12:06 pm)
[Questions and answers:]
Yesterday a system failure occurred at the Tokyo Stock Exchange, disabling trading for the rest of the day. Please let us know what you think about this incident at TSE and what steps will be taken in response.
Stock exchanges are key market infrastructure, and the fact that trading could not be conducted the rest of the day due to a system failure in this infrastructure meant that investors lost trading opportunities and their business was restricted. I think this is extremely regrettable. I do know that the TSE carried out system restoration work and restarted normal trading at 9:00 this morning. I have heard that [TSE] President Miyahara said in his explanation yesterday regarding the various reasons the system could not be restored that same day that some of the disks in the transaction system had failed, leading to aberrations in market price information and transaction oversight, and that rebooting the system to restore it would likely cause chaos among investors, market participants and securities companies so, after consulting with market officials, he determined that it would be difficult to ensure proper customer service and trouble-free trading, so trading was suspended yesterday for whole day. In any case, I believe the Japan Exchange Group and the TSE need to investigate the causes and prevent recurrences, and the Financial Services Agency needs to suitably verify that these have been done.
I would like to ask a question about the TSE. The system failure is something that I believe should not have happened but did happen, and I want to ask if you think that the TSE’s responses to this system failure were correct, and whether it is now acknowledged that there was some kind of problem.
You are asking if the TSE’s response was correct?
What do you think of the decision, after disclosing the problem and consulting with investors, to halt trading for the rest of the day?
This is about to be investigated, so it is too early here and now to say anything.
In connection with the TSE, is the Financial Services Agency planning sometime today to issue an order requesting a report as required by law?
I have not heard anything specific about the timing, but I think a thorough investigation of the causes must bear in mind the distinct possibility that, since equipment is involved, there was a breakdown. We must think about preventing recurrences and we are obliged under law to request a report, so we are planning to issue such an order promptly.
I would like to ask about the TSE system failure. With the government trying to create an international financial city, some observers believe this system failure puts a damper on this effort. I have also heard people say that this incident has exposed the risk of overconcentration in the TSE. As the government looks to establish an international financial city, what trading structure do you see as desirable in future, or do you believe that the current system is fine?
As I mentioned at the beginning, exchanges constitute extremely important market infrastructure, and I think it was very unfortunate that investor trading itself was restricted when the system failed or went down or however you wish to express it. You mentioned our future financial center and, in creating this, we must have a certain recognition that, because equipment will be part of it, there will undoubtedly be failures; just as with a car, we must operate it with the understanding that a breakdown is a likely possibility. It is important to consider such things when thinking of infrastructure.
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