Japan's Mizuho Securities said yesterday it had filed a lawsuit against the Tokyo Stock Exchange for ?41.5 billion (US$350 million) over its failure to stop a massive trade blunder in December.
The TSE has admitted that a fault in its system prevented a Mizuho Securities trader from canceling the erroneous order, caused by a simple typing error which that the firm saddled with a loss of ?40.7 billion.
The trader punched in an order to sell 610,000 shares in a telecom firm at one yen each instead of one share at ?610,000, briefly causing turmoil on the Tokyo bourse, whose head resigned soon afterwards to take responsibility.
The Financial Services Agency (FSA) has also slapped a "business improvement order" on the Tokyo exchange.
Mizuho Securities -- part of Japan's second-largest financial institution, Mizuho Financial Group -- said the claim reflected the losses on sales completed after the first cancel instruction was made.
"The litigation seeks compensation for damages caused by the TSE's failure to process a cancel operation due to a defect in the TSE's electronic trading system, despite the fact that the company properly conducted the stipulated operation to cancel an erroneous order immediately," Mizuho said.
The TSE and Mizuho Securities have held several rounds of talks on the issue of compensation but failed to reach an agreement.
"Since the discussions between the parties have not made progress, the company has reached the judgment that it has become quite difficult to resolve the issue through discussions between the parties and was compelled to file the lawsuit," the securities firm said.