Masahiro Tamagawa will never forget the sight of a jam-packed Ginza Avenue in the hours after the 9.0 earthquake, that was centered less than 200 miles northeast of Tokyo, shook the city on March 11.
“When the first big quake hit, we evacuated the building,” says Tamagawa, a senior manager with HS Futures in Tokyo. “It was right before the markets were supposed to close, and Ginza, which is our equivalent of New York’s Fifth Avenue, was packed with people huddled in the middle of the street.”
Then came the second quake.
“We held an emergency meeting right there in the street,” he says. “That’s when we decided to let everyone go home early.”
More than 1.3 million land lines and fiber-optic links across the northern and eastern parts of the country had gone dead, cutting off millions of people, but the country’s stock and futures exchanges never stopped trading and haven’t in the intervening weeks. Even on that day, as brokerages across Japan let their employees go home early, electronic trading systems kept running.
They’ve been running ever since as brokers and traders in Tokyo adapted to rolling blackouts implemented after the closure of the Fukushima nuclear plant, just 150 miles north of Tokyo.
“I don’t know of any institutional participants who lost connectivity,” says Taisuke Kiryu, managing director of Nissan Century Securities. “We all have dedicated lines, and those held up.”
Retail customers outside the tsunami zone largely were able to keep trading as well.
“Most of our customers trade online,” Tamagawa says. “If they had connectivity, they were able to keep trading.”
Many of those in the north and west, however, were left in the lurch – and it’s still not clear how many of them lost money as a result of losing touch with the markets.
“From March 11th through the 14th, right after the quake, everyone reported jammed telephone lines, even though the organization and the systems were functioning soundly,” Kiryu says. “This was especially pronounced with customers in the Kanto and Tohoku regions.”
The Tokyo Stock Exchange (TSE) reported “minor problems” at three of its member firms, but a spokesman says that no institutional customer lost connectivity. The Tokyo Commodity Exchange (TOCOM) likewise reported no loss of connectivity to member firms, although some were forced to close their doors when the blackouts were implemented to ration electricity after the Fukushima plant was shuttered.
“We closed our main office, but it didn’t affect business,” says a broker with one TOCOM member firm, asking that the company’s name not be used. “The blackouts were all coordinated ahead of time; it was very well-managed, and we were able to re-route our orders and phone lines.”