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Canceling Executed Transactions

If the placement of a large scale erroneous order is discovered, there is a possibility that executed transactions of a stock may be canceled.

Executed transactions may be canceled if all of the following conditions are met.

[ Conditions for possible cancellation of executed transactions ]

  • The erroneous order has led to execution of transactions exceeding 20% of the number of listed shares. (note)
  • TSE recognizes that it is extremely difficult to settle transactions and that there is a possibility of disruptions in TSE market.
(note)
  • ･If TSE deems settlements of the transactions is particularly difficult, executed transactions may be canceled even if they do not exceed 20% threshold.

In cases where there is a possibility of executed transactions being cancelled, TSE will promptly disseminate the following information through its website and in other ways.　Investors are advised to pay adequate attention to the information publicized by TSE when an erroneous order has been placed.

[ Details of information publicized by TSE ]

  1. Temporary suspension of order matching due to the placement of an erroneous order
  2. Trading halt for disseminating information on the possibility of canceling executed transactions
  3. Details of the erroneous order
  4. Whether or not the order-placing trading participant has filed an application for cancellation
  5. Decision on whether or not to cancel the transactions
  6. How to deal with trading after the decision above 5.
  • 1. and 2. are announced publicly only when they are actually enforced.

When an executed transaction is cancelled, the trading participant's rights and duties to the customer related to the cancelled trade will be terminated.

Canceled transactions are treated as if they had not been executed at all. The rights and duties held between investors and trading participants related to the canceled transactions are treated as if they had not been consummated at all.

Moreover, even if an investor involved in the executed transactions incurs damages, he/she may not make any claim against the trading participant who placed the erroneous order and/or TSE unless there was intentional harm or gross negligence.

Cases where the reinstatement of cancelled executed transactions may be conducted

In cases where executed transactions were cancelled, TSE may, as a special measure, approve reinstatement trading to relieve investors who seek to have their executed transactions restored

However, this reinstatement trading is only permitted in cases where the cancellation of executed transactions causes a failure to procure funds and securities for the settlement of any transactions which took place during a set period of time after the cancellation.

Please pay attention to information including statistical data in cases of cancellations

Based on the content of the cancelled executed transactions, TSE will appropriately correct information such as the opening, closing, highest, and lowest prices on the day of cancellation, as well as trading volume and volume weighted average price. As TSE's Market Information System is unable to disseminate this corrected information, TSE separately makes these correction notices available to system users via fax, etc.

Therefore, each information vendor who receives such notices may take different measures to correct statistical data, etc. accordingly. Investors are advised to take note of the above points.

In cancelled transactions, if the stock is a component of stock price indices such as TOPIX, and the closing price of the stock before the cancellation is different from that of after the cancellation, TSE will only recalculate figures for the closing prices of stock price indices using the stock prices after the cancellation. (note)

Please note that TSE will not recalculate real-time data retroactively.

(note)
  • ･Please note that in some cases it is difficult to correct data on the day of cancellation depending on the items.

[For trading participants] When a transaction is canceled, the order-placing participant must pay the cancellation fees.

If an executed transaction is canceled, the erroneous order placing trading participant must pay TSE cancellation fees according to the trading value of the cancelled transaction.

In cases where an erroneous order is placed and executed, the cancellation of executed transactions is believed to have a far greater disruptive impact on the market than if no cancellation were implemented. Therefore, taking this into account, TSE will consider whether or not to take disciplinary action, as well as the details of possible actions, against an order placing participant. TSE will then impose appropriate sanction such as fines and suspensions of securities trading, etc.

Moreover, in cases where a trading participant's application for trade cancellation is identified to have been filed for a false reason, TSE will take disciplinary actions against this participant. False reasons include cases where TSE finds no circumstances of "extreme difficulties in completing settlements" after the cancellation.

Contact

Tokyo Stock Exchange,　Stock Market Department(Strategic Planning Group)
TEL:+81-3-3666-0141