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TSE ordered to pay Mizuho Y10.7bn over 'fat finger' trade botch-up

04 December 2009  |  10859 views  |  0 Tokyo Stock Exchange

The Tokyo Stock Exchange (TSE) has been ordered to pay Y10.7 billion (£73m) to Mizuho Securities in compensation for losses incurred following a botched trade in 2005.

The Tokyo District Court ordered the payment after Mizuho filed a lawsuit in October 2006 seeking Y41.5 billion 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.

Mizuho says it immediately realised the mistake after placing the order and properly submitted several cancel orders. However, TSE failed to process the cancellation because of a defect with its electronic trading system.

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 2005 following the incident.

According to press reports, the TSE is considering an appeal.

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 the incident and an earlier systems failure at the exchange.

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