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Friday, April 30, 1999 Published at 15:52 GMT 16:52 UK


Business: The Economy

Tokyo's final floor trade

Whatever system is used, prices can still disappoint

Tokyo's stock exchange has been hit by a big bang.

Not a financial meltdown, but a change of technology. Computers have brought an end to floor trading on the Tokyo Stock Exchange.

There was emotional applause from hundreds of brokers as the closing bell rang on Friday to mark the end of face-to-face trading.

Next Thursday, following a holiday shutdown of the Japanese markets, a computer based trading system will replace the 'open outcry' floor trading system.


[ image: The traditional look in Tokyo]
The traditional look in Tokyo
The change is designed to make Tokyo a financial centre able to compete with London and New York. But among traders it aroused mixed feelings.

An official rang an ancient bronze bell, brought in for the purpose, which hung from a wooden frame.

Feel the market

Traders flung ticker tape from the balconies and pulled crackers. People crowded every space on the wide wooden floor to applaud, a tradition on the first and the last day of each year.

"Even though the floor itself will still be here, I feel very sad," said Akinori Ito, an exchange staff member for 10 years.

"This is a place where there was once a blackboard and people were running around, but I guess trading will be handled smoothly as it becomes computerised", he said.

"In the past we could feel the overall market by being on the floor, but times have changed so now we type on keyboards in front of computer screens," he added.

The exchange, with booths reserved for each member brokerage house, is surrounded by electronic price display boards.

Muted anniversary

When the Nikkei index reached the heady heights of 38,915.87 points on 29 December 1989, traders filled the bustling Tokyo Stock Exchange floor.

A decade later they were sitting quietly in their booths with hardly a soul crossing the floor.

The lacklustre atmosphere was mostly because computers had already made some of the floor trading redundant, but the gloom was also reflected on the Nikkei index - closing on Friday down 240 points at 16,701.

The trading floor will be turned into an information centre with data on listed companies and a library, while also serving as an occasional site for functions.


[ image: It will be a computer based future]
It will be a computer based future
The Tokyo Stock Exchange held a muted celebration earlier this month for its 50th anniversary after a dismal year on the bourse amid the country's deepest recession since World War II.

London, Frankfurt and Paris have already switched to computerised trading, although the New York Stock Exchange has stuck resolutely to floor trading.

Rob Hayward, London-based senior economist at the Bank of America, said that the main advantage of using the new technology was the reduction in costs.

Change not inevitable

With a floor trading system there had to be a bank of people taking telephone orders, plus a pool of skilled traders. By contrast the computerised system required fewer people.

But he said it was not inevitable that exchanges in New York and Chicago would have to switch to a computerised system.

"It is not inevitable. There are some cultural reasons ... there are vested interests to keep that system," he said, adding that there would be hundreds of jobs losses if floor trading was ended.

While the old floor trading system often seems to be chaotic, there are certain standards of behaviour, one trader told the BBC.

"There is no physical contact involving the use of hands. There is sometimes contact with shoulders when you are trying to get into a large crowd to do a deal," he said.

In Tokyo, there will be no rubbing shoulders anymore.



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