Press Conference by ASO Taro, Deputy Prime Minister, Minister of Finance, and Minister of State for Financial Services

(Excerpt)

(Friday, October 23, 2020, 10:37 am to 10:40 am)

[Questions and answers:]

Q.

Regarding the system breakdown, some media have reported that an on-site inspection of the Tokyo Stock Exchange (TSE) was conducted today under the Financial Instruments and Exchange Act. Have the on-site inspections already begun? Please also tell us what the aims of the inspections are and what steps will be taken following the inspections.

A.

We have heard that the on-site inspections began this morning. As for what the aims are, a breakdown occurred because the backup system did not work so the TSE submitted a report and, given that a backup system not working is ordinarily unthinkable, we believe it is necessary to ascertain the actual circumstances surrounding the failure of the backup system based on the report. However, we are not yet at a stage that I can respond with details about the inspections. As for further administrative responses, decisions will be made on the basis of the inspection findings, so I cannot say anything at the moment.

Q.

I have a follow-up question with regard to the TSE. While I think that causes are important to investigate in these inspections, with regard to measures to prevent recurrences, since such breakdowns must never happen again, how will you use what you discover from the inspections and what kind of guidance will the Financial Services Agency be providing? Please let us hear your thoughts on these.

A.

Our greatest concern is that the hardware failed to work. Ordinarily if something happens, the backup kicks in, and the fact that it did not work is a problem. It seems that a switchover could not be made, and it might be a different story if the TSE had been back online in the afternoon but it was not. It is necessary to ensure that the market is open again on the same day for trading in the afternoon session. I think the problem lies in the failure to properly lay out rules for such a contingency. We do believe there were system issues as described in the report. Since we are talking about hardware, a variety of unexpected things can occur, and responses to such contingencies must be decided in advance. Thought must be given ahead of time to what to do if this or that does not work or if other problems arise.