The TSE can handle 4.5 million trades per day, but closed 20 minutes early when the number of trades approached 4 million. The TSE announced that it would suspend trading for thirty minutes on Thursday to slow the pace of a continued sell-off.
This was the second day of problems for the nearly 57 year old stock exchange. The Nikkei average, the most watched index on the TSE, lost nearly 6% of its value since Tuesday, the largest loss since it fell 3.8% in April of 2005.
Japanese officials allege that livedoor.com conspired to defraud investors by concealing 1 billion yen ($8.1 million) in deficits. The company says it will not comment until it completes an internal investigation. Experts estimate that livedoor.com could lose more than a billion dollars in share value. Japanese internet stocks Yahoo Japan, and Softbank Inc. also traded lower on Wednesday.
Livedoor.com CEO Takafumi Horie is a cult figure in Japan. A dropout of Tokyo University, he has engineered several strategic buyouts and mergers, and tried unsuccessfully to purchase a baseball team, a media conglomerate, and run for parliament.
U.S. markets were further shaken by announcements by Yahoo and Intel that they had missed estimates for earnings in the last quarter. Wall Street analysts are still awaiting fourth quarter announcements from Apple and Motorola.
Markets in France, Germany, and the U.K. also lost saw losses of 0.7%, 1.2% and 0.6% respectively.
Last November computer problems kept the TSE closed until all but the last hour and a half of trading. It was the longest interruption in trading since the exchange re-opened in 1949, after its reorganization after World War II.
In December of 2005 a typographical error at a securities company caused 610,000 shares of a stock to be sold at 1 yen each, instead of 1 share to be sold for 610,000 yen. TSE officials initially blocked attempts to fix the problem. The CEO and some senior executives eventually resigned over the resulting scandal.
The TSE is the world’s second largest stock exchange with over 700 employees, and 2,302 listed stocks. The company has been reviewing plans to take its stock public sometime in the near future.