How “technology” brought the Tokyo Stock Exchange to its knees!
The world runs on technology today. What if this technology fails? Will the world come to a halt?
Thursday, Oct 1, 2020: Tokyo Stock Exchange (TSE) came to a halt due to a technical glitch.
A data device critical to the functioning of the Tokyo Stock Exchange’s trading system (called the “Arrowhead”) malfunctioned.
The automatic backup that generally gets triggered in such a scenario, also failed in less than an hour before the transactions start taking place on the exchange.
Arrowhead System was launched in the year 2010 as a solution to the earlier system which suffered technical glitches time and again. Some minute discrepancies existed, but nothing large enough to shut the exchange for an entire day.
At 8 am (Oct 1), the market participants noticed an unusual activity of data appearance and disappearance. Some participants started doubting the accuracy of data flowing in.
The exchange soon announced a technical issue to its participants on the floor. It was expected to be resolved soon, but another announcement by the exchange at 8:30AM stating a complete halt of trading created panic in the entire ecosystem.
The TSE never remained closed, not even during natural calamities and disasters.
The exchange drew severe criticism from all corners, including a statement from the Finance minister, Mr Taro Aso. He stressed on the importance of having a market infrastructure that accounted for possible technology breakdowns.
At 4:30 pm, the exchange addressed a press conference that lasted 100 minutes. Not only were the technical aspects of the failure addressed, but the exchange also bowed down in an apology for the outage.
Failure was accepted by the exchange without any blame game (can’t even imagine everything going so smooth in India, eh?).
A reassurance of resuming trading on Friday was given.
This entire episode brings to light the vulnerability of systems of the financial world that are just one technical failure away from a complete disaster.
Very recently, the state of Maharashtra (in parts, mainly Mumbai) suffered a massive power blackout that lasted a few hours. The NSE and BSE surprisingly remained stable. But what would happen if the power blackout had lasted longer? Nobody knows!
So…
Can something similar happen to other stock indices of the world? What would happen if NSE or BSE had a massive device failure?
Food for thought?
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By: Divya Parakh
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