Trading Foul-Up Not All Firm's Fault

Spare a thought for the folks over at Mizuho Securities, as it seems that that $223m trading foul-up last week wasn't all their fault. It appears that the Tokyo Stock Exchange failed to respond to no less than four attempts by the bank to cancel the order.

Just last month the exchange suffered a total trading shutdown as a result of a systems failure, and it now seems that a systems error prevented Mizuho from cancelling the order which will result in a loss of at least $223m, slightly less than the entire profit the firm made in the year to March 2005.

The news of the loss filtered through on Thursday, after someone at Mizuho processed an order to sell one share in Japanese recruitment firm J-Com for 610,000 as 610,000 shares at one yen each! The Japanese firm soon spotted the error, but wasn't able to do anything about it. Furthermore, Mizuho didn't disclose the details of the foul up until after trading closed, and the Tokyo Stock Exchange didn't suspend trading in J-Com until the following day. All in all, a right up!

It is now possible that Mizuho could look to the exchange to make good some, if not all, of its losses. Toyko Stock Exchange President Takuo Tsurushima indicated that he might quit over the affair, which raises further doubts about whether the exchange is really ready for its planned IPO.

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