The NYSE Euronext will advise the Tokyo Stock Exchange (TSE) on several key areas of information technology, under a new agreement.
NYSE Euronext engineers will work with their counterparts at TSE to provide recommendations on network management, exchange system capacity and performance management.
TSE's trading system has been plagued with problems. In January this year, the bourse was forced to close early as it struggled to cope with a surge in sell orders. The TSE blamed Fujitsu - which is responsible for the development and support of its trading platform.
TSE was also embroiled in a "fat finger" incident in December 2005, when a dealer accidentally sold 610,000 shares for one yen each, rather than the intended transaction of one share at 610,000 yen. The exchange failed to cancel the mistaken order. Since then, TSE has signed Fujitsu to provide a next generation trading system, due to go into operation in late 2009.
The financial terms of the deal with NYSE Euronext, the first fruits of a strategic accord signed in January, have not been disclosed.
In February, the Japanese exchange operator also formalised a similar deal with the London Stock Exchange, which will see the two exchanges share information on technology to ensure their IT systems can exchange data efficiently.
The two major partners had set up regular working groups to finalise the details of cooperation in a wide range of areas including trading systems and technology, investment products, governance and regulation.
The agreement on technology advice is the first product to surface from these negotiations and industry pundits believe it signals a possible merger between the two exchange groups.
CEO of NYSE Euronext, John Thain said the consulting agreement provides the opportunity to share systems and technological expertise. Thain also noted that NYSE Euronext and TSE "are exploring cooperation in a number of areas that are beneficial to both parties".
Atsushi Saito, president and CEO, TSE Group, commented: "We see that, based on this agreement, receiving advice from the NYSE Euronext will enhance our system operations and benefit a variety of market participants."
NYSE Euronext is created through the merger of NYSE Group, holding company of the New York Stock Exchange, and Euronext, the operator of stock bourses in Europe.