Two recent system failures — this week and last November — and a £200 million “fat finger” error have exposed gaping flaws at the exchange (TSE), which is already derided by investors over its incompetent handling of market crises.

“If anything is going to send a chill through an already white-knuckled market,” one broker said, “it’s the TSE behaving like an exchange in some tin-pot emerging market. This is very bad for Livedoor, but a serious knock for confidence in the TSE.”

Brokers said that the TSE’s advice to slow down trading halfway through yesterday’s session smacked of desperation. One trader at a American house said: “The idea that we should falsely slow down trading is a piece of market manipulation in itself. If people want to sell, it is outrageous that the world’s second-biggest exchange can’t handle the pace.”

According to official reports, the TSE has not managed to keep up with the rising number of small investors trading small numbers of stocks online.

Last November a system crash suspended all trading for a large part of one day, and in December a “fat finger syndrome” incident was wildly exacerbated by the TSE’s inability to reverse an obviously erroneous “sell” order. Fund managers have also lambasted the antiquated trading system.

Last month Takuo Turushima, the exchange’s chief executive, resigned amid criticism that the TSE had failed to respond to repeated cancellation orders placed by Mizuho Securities after a trader cost his firm more than £200 million in rectifying a botched trade.

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