How a piece of hardware took down Japan's $6-trillion stock market

At 7:04 am on an autumn Thursday in Tokyo, the stewards of the world’s third-largest equity market realised they had a problem.

A data device critical to the Tokyo Stock Exchange’s trading system had malfunctioned, and the automatic backup had failed to kick in. It was less than an hour before the system, called Arrowhead, was due to start processing orders in the $6 trillion equity market. Exchange officials could see no solution.

The full-day shutdown that ensued was the longest since the exchange switched to a fully electronic trading system in 1999. It drew criticism from market participants and authorities and