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Tokyo Stock Exchange Glitch Brings Trading to a Halt

TOKYO — The Tokyo Stock Exchange shut down for the day on Thursday as its operator raced to solve a technical glitch that halted equities trading throughout the world’s third- largest economy.

The breakdown is the worst ever for one of the globe’s biggest platforms for buying and trading stocks, bewildering investors who were unable to place orders. While the exchange has experienced outages in the past, none had stopped trading for a whole day.

The exchange’s operator, Japan Exchange Group, said it was taking steps to allow trading to resume on Friday. But the outage could shake investors’ faith in the reliability of the Japanese stock market, especially if problems appear again or if investors are found to have lost significant amounts of money.

The shutdown stemmed from a problem in a system that reports market information, the company said in a statement on its website. In a later statement, it blamed an unspecified equipment failure and said a backup system had failed to kick in. The company offered its “deepest apologies” to investors and others affected by the shutdown.

The glitch first became apparent on Thursday morning in Tokyo before trading began, postponing the beginning of the session. At about noon, the company announced that trading would be stopped for the entire day.

Trading was also halted at exchanges in Nagoya, Sapporo and Fukuoka, the companies running them said. After-hours trading on the markets was also stopped.

Trading in Japan’s second-largest exchange, in Osaka, appeared to be unaffected.

More than 3,700 companies are listed in Tokyo.

At a regularly scheduled news conference on Thursday, Japan’s top government spokesman, Katsunobu Kato, called the breakdown “very regrettable” and said that the exchange was taking “actions to identify the cause of the problem and restore it.”

In response to earlier questions about the reason for the outage, he said there was no indication that the shutdown had been caused by a cyberattack. Earlier this year, a distributed denial-of-service attack disrupted trading on New Zealand’s stock exchange, raising concerns about the vulnerabilities of global stock markets to threats from hackers.

As of December, the Japan Exchange Group ran the world’s third-largest equity market, behind the New York Stock Exchange and Nasdaq, with nearly $6.2 trillion worth of stocks, according to the World Federation of Exchanges. It had more listed companies than any other exchange, the group said.

Thursday’s breakdown effectively halted all trading in the region. Japan was the only major market that had been expected to open, with exchanges in mainland China, Hong Kong, Taiwan and South Korea closed for autumn holidays.

The shutdown was a headache for investors who had been awaiting the release of a quarterly report from the Bank of Japan that tracks economic sentiment among the country’s companies. The report showed cautious optimism among firms adjusting to a future in which economic activity will probably continue to be limited by restrictions on work and life imposed by the coronavirus.

“Individual investors are losing a day of trading, so a huge number of people will be upset,” said Tomoichiro Kubota, a market analyst of Matsui Securities.

But the overall impact of the disruption is likely to be minimal, he said, noting that the timing — coming while markets were closed across the region and after the American presidential debate — had been “fortuitous.”

“If this had happened yesterday, before the presidential debate, it would have caused upheaval in the markets,” he said, with investors losing the opportunity to make short-term trades based on the candidates’ performances.

Nevertheless, if the issue is not resolved soon it could shake investor confidence in Japan’s markets, just as the country seeks to take advantage of disruptions in Hong Kong to draw business.

The Tokyo Stock Exchange introduced its current market data system in 2010 and upgraded it last November. The system, known as Arrowhead, was developed by Japan’s Fujitsu Limited.

Japan has faced similar problems over the years, with system glitches occasionally stopping some trading for brief periods. The last systemwide shutdown was in 2005, when a software upgrade malfunctioned, shutting the market down for half a day.

Such malfunctions have not been limited to Japan. In 2015, a technical issue shut down the New York Stock Exchange for nearly four hours. In 2013, a “flash freeze” halted trading on Nasdaq.

The outage came at a time when Japan’s markets were on the mend. Stocks in Tokyo crashed in March because of investors’ fears about the pandemic’s economic effects. Prices have recovered in the months since, with investors flooding into companies, such as pharmaceutical firms, expected to benefit from the global fight against the virus. Shares are currently down more than 5 percent since the beginning of the year.

Hisako Ueno, Makiko Inoue and Hikari Hida contributed reporting.

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