The Japanese securities firm at the centre of a massive trading blunder on the Tokyo Stock Exchange was ordered by the financial watchdog to clean up its business practices.
The government's Financial Services Agency issued a 'business improvement order' to Mizuho Securities, which was left saddled with an estimated loss of $330m due to a simple typing error by one of its dealers.
The watchdog demanded the brokerage urgently draw up a plan to improve the design and operation of its system of placing securities orders. It must report back by January 20 and submit quarterly reports thereafter.
The Financial Services Agency last week also slapped a business improvement order on the Tokyo Stock Exchange over the chaos of December 8, when Mizuho Securities was unable to stop or correct a huge erroneous sell order. The head of the Tokyo Stock Exchange, Asia's largest, resigned on Tuesday to take responsibility for the mayhem.
On December 8, a trader at Mizuho Securities punched in an order to sell 610,000 shares in a telecoms firm at one yen each, instead of the intended sale of one share at 610,000 yen.
Others in the market very quickly noticed the mistake and bought the stock massively before selling it on again to make a quick and easy killing. The debacle left Mizuho with an estimated loss of 40 billion yen ($330m) although that may shrink with some rivals moving to return their profits.
The Financial Services Agency also called on all securities firms operating in Japan to check their in-house trading systems and processes to try to avert a repeat of the fiasco.
