TSE plans $529m trading system upgrade

After a year of operational embarrassment, the Tokyo Stock Exchange plans to spend $529 million on upgrades to its electronic trading platform.

The exchange will spend $128 million on improving existing systems, $256 million on replacements, and $145 million on a backup site over the next three years, chairman Taizo Nishimuro said today.

Last month, as a response to several systems failures, the exchange promised to increase its capacity from nine million to 12 million orders per day by May, and to 14 million by the end of the year, at a cost of $27 million.

Following the Livedoor listing scandal earlier this year, the exchange also plans to strengthen its regulatory arm, making the listing examination and supervision departments self-regulating to increase their independence.

The exchange set a goal of over Y73 billion ($626 million) revenues by 2008, compared with Y53 billion in 2004 (results for 2005 are not yet available).

The TSE suspended trading after a systems crash in November 2005. In December, a fault in its systems allowed a fat-finger trade by Mizuho through, leaving the bank with hundreds of millions of dollars in losses. January saw two mistaken orders allowed through, and another trading suspension, as the exchange realised its systems could not cope with trading volumes following the Livedoor scandal.