Glitch stops Nikkei updating

Publisher Nihon Keizai Shimbun, which compiles Tokyo’s benchmark Nikkei 225-stock average, said the suspension was caused by a system error related to power outages that hit large parts of the Japanese capital earlier in the day.

It aimed to bring back the system to normal by Tuesday morning, but could not give a full assurance, Noboru Yoshioka, general manager of electronic media bureau at Nihon Keizai Shimbun, told a news conference.

“I’m 99 percent sure that it will be all right but I can’t give you a 100 percent guarantee at the moment,” he said, adding that it plans to run tests on the system later on Monday or early on Tuesday.

Trading of individual stocks was not affected.

The Tokyo Stock Exchange’s own computer trading system was running normally, unlike a day in January when a flood of sell orders nearly swamped the system, forcing the exchange to close early. The world’s second-largest bourse then shortened trading hours for three months until April.

That shutdown dealt another blow to the image of the exchange after a raft of technical glitches, including one that halted share trading for almost a full day last November.

On Monday, the bourse switched to its in-house power-generating system at the time of the early morning power outages, and trading of individual stocks went on as usual. A series of stock indexes compiled by the Tokyo exchange, including the broad TOPIX index, and derivatives contracts based on the Nikkei average were also unaffected.

This helped to limit the impact of the Nikkei halt on the overall market.

“I don’t think this is a big problem for investors,” said Junichi Misawa, senior fund manager at STB Asset Management.

“Fund managers, who use the Nikkei as a benchmark, simply hold Nikkei components to manage their funds, not the benchmark itself,” he said. “Those who are engaged in arbitrage trades do their own calculations of the Nikkei average on a real-time basis.”

Still, the halt kept some participants from trading actively and helped further reduce trading volume in a market that is usually thinned at the peak of Japan’s summer holidays.

A spokesman for Daiwa Securities Group Inc., Japan’s No.2 brokerage, said it had its own computer system to calculate the Nikkei average, but retail investors who could not clearly see market direction might have been more affected.

Trading volume fell more than 20 percent from Friday, with just 1.308 billion shares changing hands on the Tokyo exchange’s first section, the lowest total since July 2005.

Traders had earlier reported problems with some computer systems due to the power outages, which affected about 1.4 million homes before power was restored by late morning.

The Nihon Keizai official said the company switched to its in-house power-generating system at the time of the early morning power outages, but the in-house system went down in early afternoon as its capacity was about six hours.

There is a back-up system to calculate the Nikkei average, but an error occurred when it tried to switch to the system, the official said. The company is still investigating further details of the cause, he said.

This is the first time the Nihon Keizai failed to update its main index product while individual stocks were being traded since it took over the calculation from the Tokyo exchange in 1970, a Nihon Keizai spokesman said.

When the Tokyo exchange finished trade as usual at 3 p.m. (0600 GMT), the TOPIX index was 1.46 percent higher at 1,601.02, clearing the 1,600 level for the first time since July 7.

The Nihon Keizai later estimated the Nikkei average finished at 15,857.11, up 1.88 percent from Friday’s close. The Nikkei 225 was last updated at 1:25 p.m. (0425 GMT), when it was up 1.45 percent at 15,790.82. ‘ Reuters.

August 2006
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