JPX Director resigns, execs accept pay cuts following recent system failure
The recent system failure which has plagued the work of Japan Exchange Group, Inc. (JPX) and its subsidiary Tokyo Stock Exchange, Inc. (TSE) on October 1, 2020, has resulted in resignations and pay cuts.
JPX today announced that Miyahara Koichiro, Director & Representative Executive Officer, Group Co-COO of JPX, has taken seriously his responsibility for the failure in the arrowhead cash equity trading system that occurred on October 1, 2020, and has requested to resign from his position as President & CEO of Tokyo Stock Exchange, Inc. (TSE) and all other held positions within the Group, effective on November 30, 2020. JPX has accepted this request.
Kiyota Akira, Director of TSE, accepts a 50% pay reduction for four months, whereas Yokoyama Ryusuke, Senior Executive Officer & CIO of JPX, accepts 20% reduction in monthly pay for four months. Kawai Hiroki, Executive Officer of TSE, has accepted a 10% reduction in monthly pay for a period of four months.
Also today, JPX confirmed that the Financial Services Agency of Japan (FSA) issued business improvement orders regarding the system failure.
On October 1, 2020, a system failure occurred in the cash equity trading system at TSE. The failure made it impossible to start trading of all listed issues on TSE. Trading failed to resume and was suspended for the whole day.
FSA found that, although the incident was directly caused by a defect in a failed device, a setting for the automatic switchover regarding the failed device was inadequate and TSE had not developed sufficient rules for trading resumption.
TSE will have to develop clear and effective rules for suspension of order acceptance and trading resumption, assuming a case of trading suspension by means other than the normal manner, taking into consideration various viewpoints of roles to be played by an exchange, such as protection of investors, improvement of convenience and stable operation of markets, and then carry out tests and drills involving trading participants.
Rules for trading resumption involving trading participants will have to be developed not only at TSE but also at other exchanges including OSE.
Given the fact that the confidence of investors and other stakeholders was seriously undermined as a result, the locus of responsibility regarding the management of subsidiary exchanges will have to be clarified.