A stampede of sell orders forced the shut-down of the world's second-biggest stock exchange this morning as investors fled the Tokyo market, worried by fall-out from an investigation into internet company Livedoor.
The Tokyo Stock Exchange, where shares were down more than 4% at one point, suspended trading 20 minutes before the normal closing time after the number of trades threatened to exceed its computer system's capacity of 4.5 million per day.
It the first time that the exchange was forced to halt trading as a result of capacity constraints since it opened its doors in its current incarnation in 1949.
Prosecutors raided Livedoor, a favourite of small investors, on Monday. The firm is suspected of fudging financial reports and spreading false information to boost its share price.
News of the raid extended a sell-off that has wiped out more than $300 billion in shareholder value - about equal to the gross domestic product of Sweden - in just three days.
'The current situation is totally unexpected. My guess is that Livedoor's investigation news spooked individual investors and prompted them to sell broad-based stocks,' Tokyo Stock Exchange president Taizo Nishimuro told a news conference.
The exchange has been hit by a series of recent system problems, including a glitch that halted trading for almost a full day late last year. Today's shut-down dealt another blow to the image of the exchange, which has plans to list its own shares.
Mr Nishimuro said that the exchange, which had already planned to increase capacity to five million shares on January 30, would consider shortening trading hours on Thursday and beyond if necessary.
The Nikkei finished down nearly 3% at 15,341.18 but that was still its biggest one-day fall since April 18, 2005.
