How one piece of hardware took down an $8 trillion stock market

TOKYO - At 7:04am on Thursday in Tokyo, the stewards of the world's third-largest equity market realized they had a problem.

The TSE's Arrowhead system launched to much fanfare in 2010, billed as a modern-day solution after a series of outages on an older system embarrassed the exchange in the 2000s. The"arrow" symbolizes speed of order processing, while the"head" suggests robustness and reliability, according to the exchange. The system of roughly 350 servers that process buy and sell orders had had a few hiccups but no major outages in its first decade.

A minute later, the bourse made its first communication, informing systems administrators at securities firms that there had been an issue. At some brokerages, that didn't immediately filter down to befuddled trading desks. It was the first time in almost fifteen years that the exchange had suffered a complete trading outage. The Tokyo bourse has a policy of not shutting even during natural disasters, so for many on trading floors in the capital, this experience was a first.

But as the hours passed, Hajime Sakai, the chief fund manager at Mito Securities, grew increasingly uneasy. Many in the market say they were relieved. A call to resume trading would have been chaotic, said one worker at a Tokyo-based brokerage, with no way to tell which existing client orders remained active, while also trying to process new asks and bids.

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