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Friday, April 21, 2006

TSE to reinstate normal trading hours Monday

Staff writer

The Tokyo Stock Exchange said Thursday it will resume regular trading hours Monday, three months after it began delaying its afternoon session to deal with surges in transactions caused by the Livedoor Co. scandal.

Asia's largest bourse has been starting the afternoon trading session 30 minutes later at 1 p.m. since Jan. 19. The TSE had shut down 20 minutes early the previous day for fear of a system overload, due to a flood of sell orders from panic-stricken traders and investors spooked by prosecutors' raid on the Internet firm.

The afternoon session will return to its usual start time of 12:30 p.m.

The TSE said sell and buy orders are now stable at between 5 million to 5.5 million and the number of transactions is also stable at between 2 million to 3 million, even after Livedoor was delisted on April 14.

"Even if the orders and transactions increase after we resume regular trading hours, we believe our system has sufficient capability to deal with them," TSE President Taizo Nishimuro said in a statement.

However, he said the bourse would halt the system if orders exceed 8.5 million or transactions top 4.5 million in one day.

The computer system currently can handle 9 million orders a day and about 5.5 million transactions. The bourse will be upgraded next month to increase the daily trading capacity to 12 million orders and 7 million transactions.

"We have reflected deeply on the fact that we damaged (public) trust in the TSE system," Hironaga Miyama, a TSE executive officer, told a news conference. "But we had no other choice."

In addition to the January "Livedoor Shock," the TSE has had several other technical problems in recent months, highlighting the inadequacy of its computer system to cope with the increase in online trading and influx of individual traders.

On Nov. 1, the bourse was forced to suspend all trading for most of the day due to a computer glitch, and the following month, the system was unable to cancel a huge erroneous sell order from Mizuho Securities.

Experts welcomed the return to resumption of trading hours, saying it probably would boost trading by office workers who make orders during the lunch hour on cheap and popular Internet companies' shares.

"Transactions on those stocks have declined in the past several months," said Eiji Kinouchi, chief technical analyst in the investment strategy department of Daiwa Institute of Research. "But it may be invigorated by the resumed hours."

Kinouchi was not critical of the TSE's decision to cut trading hours, saying it was cost effective.

"If the TSE goes on and on increasing its capacity, the investment cost will be added to transaction fees for investors," he said.

What is important, Kinouchi said, is for the bourse to take measures to monitor listed companies so they refrain from actions that could cause a surge in transactions, including repeated stock splits.

In the case of Livedoor, founder Takafumi Horie said his firm was courting individual investors by making its shares cheap by setting the minimum trading unit at one share and conducting large-scale stock splits.

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The Japan Times

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