Tokyo bourse ordered to pay 120m dollars

December 4, 2009

, TOKYO, Dec 4 – A Japanese court on Friday ordered the Tokyo Stock Exchange to pay compensation of more than 120 million dollars over its failure to stop a massive trade blunder in December 2005.

The lawsuit against Asia\’s largest bourse was filed by Mizuho Securities – part of Japan\’s second-biggest bank, Mizuho Financial Group – which demanded 41.5 billion yen (470 million dollars) in compensation.

The TSE has admitted that a fault in its system prevented a Mizuho Securities trader from cancelling the erroneous order, caused by a simple typing error which left the firm saddled with a loss of 40.7 billion yen.

The trader punched in an order to sell 610,000 shares in a telecom firm at one yen each instead of one share at 610,000 yen, briefly causing turmoil on the Tokyo bourse, whose head resigned soon afterward to take responsibility.

Mizuho Securities said the claim reflected the losses on sales completed after the first cancel instruction was made and other expenses.

The Financial Services Agency (FSA) also slapped a "business improvement order" on the Tokyo exchange.

The Tokyo District Court ruled that the TSE must pay compensation of 10.7 billion yen (121.44 million dollars) to the securities firm.

After the incident, Mizuho Financial Group reported the typing error had caused the company\’s net profit to decline by 6.8 percent in the nine months to December 2005 from a year earlier.

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