Tokyo Stock Exchange’s chief information officer talks about implementing the bourse’s cash equities trading platform, a long process that has brought with it many challenges.

The role of IT systems is perhaps most noticeable when things go wrong. And when they go wrong, they can go horribly wrong. If the trading platform at a stock exchange fails, so does the market.

The role of the chief information officer (CIO) at such times is unenviable and, just like the technology, the CIO is most noticeable when things go wrong. The Tokyo Stock Exchange (TSE) has been no stranger to calamities and over the years has suffered a few high-profile suspensions to trading.

Catching up with the competition

Since 2006, Yoshinori Suzuki has been tasked with overhauling the bourse’s outdated systems and enabling Tokyo to compete with its international peers. Under his watch, the TSE launched the Tdex+ derivatives trading system in October 2009, the Arrowhead cash equities platform in January 2010, and the New Tdex+ System was launched in November 2011. Unfortunately for Mr Suzuki, the nature of his job means that he does not get much media attention when things go right.

He stepped into the CIO role following a high-profile glitch in 2005 that caused major disruption to trading, as well as the TSE’s reputation. The Arrowhead project to upgrade the TSE’s cash equities platform began in 2006. “At that time, high-speed trading systems were a must. It had already started in 2004 in other places and TSE had to catch up,” says Mr Suzuki. “When we cut over to the new system, the response time was 2 milliseconds. Now it is faster at less than 1 millisecond. We are already considering upgrading it in about two years’ time.” 

“It was important to ensure scalability and also reliability,” he says of the project’s priorities. After a public tender, Fujitsu – also the technology vendor for the old system – was selected. “Fujitsu was selected for its high reliability,” says Mr Suzuki.

When asked if he was able to sleep easily at the time of the cutover to the new system, Mr Suzuki says: “It is not something that gives me great fear,” and goes on to add that the biggest challenge with this project was building a totally new model.  

Software development

The software development itself was completed eight months before the cutover. “We decided to spend ample time testing the brokers,” says Mr Suzuki, explaining that the testing was done on the brokers’ software as well as at the exchange to stabilise both sides of the system. “Of course, it is true that every time we introduce and implement a new system, we have to stay a little nervous. With this particular system, the software was very stable,” he says.

Between January 2010 and June 2010, Mr Suzuki explains, there had been only 26 bugs, half of which were in the middleware, the rest in the software. He adds that they were not serious and caused relatively minor problems, such as jamming the displays or not aligning digits correctly. “The software stability, which was assured in the development phase, helped a lot,” he says.

“We assumed in the design phase that we would have to cope with switchover failures. From my experience of working at NTT Data, I knew that hardware does not always behave as you want it to behave.” 

In February 2012, TSE learnt the harsh lesson that humans also do not always behave as they are supposed to. After two years with Arrowhead, a server failed and an operator did not check whether the back-up server had kicked in. It had not. Mr Suzuki confirms that the suspension in trading was caused by human error. “People always make mistakes – that has to be a very basic assumption upon which we operate the system,” he says.

When such incidents occur, Mr Suzuki is under pressure from the scrutiny of politicians, regulators and the media. And with the merger of TSE with Osaka Securities Exchange scheduled for January 2013, there will be no easing in the demands of his role.


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