The Tokyo Stock Exchange has set out ambitious plans to improve the reliability of its computer systems in response to the first total shutdown in its 56-year history.
The world’s second biggest bourse will ramp up the amount of checking of its IT systems, in a bid to spot to errors such as the glitch that closed trading for three hours on November 1.
It is also expected to create a physically separate back-up site, which could improve its ability to start trading again quickly in the event of a catastrophe in Tokyo such as a big earthquake or an outbreak of avian flu among humans.
Neal Katkov, manager of Asian research at Celent, the consultancy, in Tokyo, praised the breadth of the TSE’s review – which will go beyond simply trying to iron out temporary computer glitches to responding to disasters that could stop trading for several days at a time.
But he warned that Japan’s securities industry as a whole needed to improve its responsiveness to future catastrophes, by setting up back-up sites a good distance outside the capital.
The TSE’s IT plans – much of which are in a report submitted this week at the request of the Financial Services Agency – emphasise the role of outside parties in checking its IT operations.
The exchange plans to set up an external “system advisory committee” to keep a watch on IT security. Moreover, it will use a third party to audit changes in its operational procedures.
The TSE has not decided exactly how to change its IToperations. But it will look closely at how the exchange’s IT staff interact with outside IT providers.
The exchange had already blamed the November 1 shutdown on misunderstandings between companies involved in different parts of the exchange's IT operation, The Tokyo Stock Exchange asked Fujitsu, the computer company, to issue certain instructions toTCS, a company spun out of the TSE but still affiliated to it, theTSE said.
But during the process the instructions were misunderstood, and a crucial software file was not moved to where it should have been. The result was that during the regular end-of-month clean-up of the trading system, an error occurred which prevented trading of stocks and convertible bonds for all but 90 minutes of the day.
The TSE will also look at whether it has enough people in IT system development and management, and whether they are good enough. It has about 100 directly employed IT staff, aside from outside consultants.
The exchange denied reports that the TSE was going to double planned IT spending in the three years to March 2008 from the existing budget of Y23bn. But it said spending would “probably”be higher than Y23bn.
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