A glitch with Merrill Lynch Japan Securities Co. Ltd.'s login system caused the Oct. 9 partial connection failure with one of the channels connecting Tokyo Stock Exchange Inc.'s trading system to brokerages, The Nikkei reported Oct. 11, citing sources.

The problem allegedly originated with an overseas customer of Merrill Lynch Japan who conducts high-frequency trading. The trader tried to log in to the brokerage's systems but was unable to do so. A programming bug then prompted the system to send a stream of login requests, which reached the stock exchange since the trader was using direct market access through the Merrill Lynch Japan's connection.

The influx of login request took one of the four connections between brokerages and the bourse's servers out of commission, the sources said. Trading resumed Oct. 10 but the glitch may have caused losses to traders as they could not place orders when they wanted to.

A spokesman for TSE parent Japan Exchange Group Inc. said "a certain brokerage" was the cause of the connection failure but did not give further details. Japan's Financial Services Agency has directed the TSE to submit a report on the system failure as well as issues with transferring to backup lines.