ID :
94948
Tue, 12/15/2009 - 09:12
Auther :

Tokyo Stock Exchange not to appeal ruling over botched trading+

TOKYO, Dec. 14 Kyodo - Tokyo Stock Exchange Group Inc. said Monday it will not appeal a court ruling ordering the operator of Japan's biggest bourse to pay damages of around 10.7 billion yen to Mizuho Securities Co., saying an appeal would be time-consuming
and counterproductive to its ongoing efforts to improve its trading system.

The Tokyo District Court on Dec. 4 ordered Tokyo Stock Exchange to pay the
damages to Mizuho Securities, saying the Tokyo bourse bore greater
responsibility in a case of botched trading in 2005 that caused the brokerage
to incur hefty losses.
Meanwhile, Mizuho Securities said it is ''continuing to consider carefully''
what actions to take against the district court ruling.
Tokyo Stock Exchange plans to pay the damages of about 10.7 billion yen ordered
by the court, plus interest at an annual rate of 5 to 6 percent, accrued from
Dec. 8, 2005, when the incident took place.
The amount of damages the bourse would pay including interest is expected to
total about 13.2 billion yen as of Monday. Tokyo Stock Exchange intends to book
the amount as a special loss in its earnings for this fiscal year ending next
March.
Tokyo Stock Exchange had been weighing options including the possibility of
appealing the ruling.
It said in a statement that it had decided against appealing the ruling to
avoid ''wasting an excessive amount of time on past issues and confusing the
market.''
''It is best for us to make utmost efforts to invigorate our country's
securities market, which is important infrastructure, and help in the nation's
economic recovery following the announcement regarding deflation,'' Tokyo Stock
Exchange said in the statement.
The incident involved Mizuho Securities mistakenly placing a sell order for
610,000 shares in staffing company J-Com Co. at 1 yen on the exchange's Mothers
market, although it had intended to sell one share for 610,000 yen.
Mizuho Securities tried to withdraw the sell order immediately after noticing
the mistake, but the stock exchange's computer system failed to process the
cancellation order, leading the brokerage to take steps such as buying back
shares. In about 10 minutes, the brokerage incurred losses of about 40.7
billion yen.
Mizuho Financial Group Inc.'s brokerage unit sued Tokyo Stock Exchange in
October 2006, seeking 41.5 billion yen in damages, arguing the Tokyo bourse's
computer system failed to respond to the cancellation order.
The district court said that while Mizuho Securities was also at fault for
placing the erroneous order, Tokyo Stock Exchange bore greater responsibility
for providing a defective system that prevented the brokerage from canceling
the order.
Tokyo Stock Exchange President Atsushi Saito said at a news conference after
the ruling that the court decision was ''unfortunate'' because the root problem
was the brokerage's mistaken order.
The legal face-off drew attention in the financial market as it was the first
time a securities firm had sued the operator of the stock exchange over equity
trading.
In its statement Monday, Tokyo Stock Exchange repeated its pledge to prevent a
recurrence of a similar incident.
Tokyo Stock Exchange has been working on the launch on Jan. 4 next year of a
new trading system for auction trading of items such as stocks, which it says
will provide high-speed placement and processing of orders.
==Kyodo
2009-12-15 00:01:10

X