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Mizuho sues TSE over 'fat finger' trade botch-up

27 October 2006  |  9609 views  |  0 Tokyo Stock Exchange

Japan's Mizuho Securities has filed a lawsuit against the Tokyo Stock Exchange (TSE) seeking Y40.4bn ($350m) in compensation for losses it incurred following a botched trade last December.

The Japanese broker said in August that it was seeking compensation from the TSE over the "fat finger" trading error, where a dealer mistakenly offered to sell 610,000 shares for one yen each in recruiting company J-Com, instead of one share for Y610,000.

The brokerage was forced to buy back the shares from market investors at a massive loss and booked a one time charge of Y40.7bn in the third quarter of last year following the incident.

The TSE later admitted that a problem with its own dealing system prevented the trader from cancelling the erroneous share-sale order.

According to local press reports Mizuho filed the lawsuit after the exchange repeatedly turned down its requests for compensation and it became clear that a private settlement was "out of reach".

The Mizuho trade claimed the job of TSE president Takuo Tsurushima - who resigned alongside IT head Sadao Yoshino and managing director and executive officer Tomio Amano - following this incident and an earlier systems failure at the exchange.

Separately, the TSE is reportedly holding talks with the New York Stock Exchange (Nyse) concerning a capital and operational tie-up. The move comes as the US exchange focuses on increasing its presence in Asia amid intensifying competition among exchanges.

In a statement TSE says it has held discussions with the NYSE concerning on business alliance and has investigated "a variety of different possibilities".

"The TSE is currently addressing many operational challenges such as construction of the next-generation system and listing of the TSE's shares. While steadily implementing these plans, the TSE will look into such alliances with other exchanges abroad," says the statement.

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