Online trading services provider Monex Group, Inc. (TYO:8698) today announced that its Japanese brokerage Monex, Inc., will terminate an outsourcing contract regarding data system operation for the purpose of replacing its backbone brokerage system. The company also noted that certain expenses will be incurred as a result of the decision to terminate the outsourcing contract.
1. Rationale for terminating the outsourcing contract
Monex, Inc. has been developing a new backbone brokerage system in order to cut its fixed-type costs. It will terminate an outsourcing contract to operate data systems for trading financial instruments effective as of September 30, 2016.
2. Impact on the business performance
The company estimates that in the third quarter of the fiscal year ending March 31, 2016, approximately JPY 2.4 billion ($19.54 million) will be reserved as expenses for terminating the contract.
The overall data processing expenses Monex Inc posted for the first half of the fiscal year ending March 31, 2016, amounted to JPY 2.79 billion in total. The costs associated with this outsourcing contract accounted for about 60% of the sum. Thus, the termination of this outsourcing contract will result in cutting the amount of data processing expenses on and after October 2016.
The amount to be invested in a new backbone brokerage system during the period from the present time to September 2016, including the amount which was already invested but yet to start amortization, is approximately JPY 11.4 billion.
The full announcement from Monex can be viewed by clicking here.