TO ALL:
You might want to print out a copy of your positions each night for the next several months---
Monday July 13, 8:57 pm Eastern Time
U.S. securities groups band together on millenium test
By Jennifer Westhoven
NEW YORK, July 13 (Reuters) - Wall Street's technology leaders teamed up on Monday for a ''beta test'' -- their first united
effort at defusing the millennium computer bomb.
Monday marks the first day of a beta test, or trial test, by nearly 30 big Wall Street firms, major U.S. stock markets and some
clearing and settlement firms that will actually simulate the date rollover.
The tests, although not yet considered perfect, are crucial because the world's financial markets have become so closely
connected by computers that blackouts in one big area or firm could rock world financial markets when they open for trading
on Monday, Jan. 3, 2000.
''If a major market financial center or major market participant is not prepared on that first business day of the new millennium,
markets around the world and market participants will suffer,'' New York Stock Exchange Chairman Richard Grasso testified
before a congressional panel in April.
Participants include Wall Street heavies Merrill Lynch & Co. Inc., Spear, Leeds & Kellogg, the New York Stock Exchange,
Nasdaq, and the Depository Trust Corp., as well as Reuters Instinet, an automated stock trading unit of Reuters Group Plc. All
underwent internal testing before they could take part.
The tests cross into the stock market, options, corporate bonds, municipal bonds, mutual funds and other areas. Money
markets will be tested on Sept. 17 and the futures industry beta test will start Sept. 12.
''Most companies never test all their systems at the same time, let alone in conjunction with the systems of other companies,''
Jim Woodward, senior vice president of Cap Gemini America, said in June. Cap Gemini is the U.S. unit of the Paris-based
international information technology services firm Cap Gemini SA.
The equities test, which runs through July 22, will send orders dated Dec. 29, 1999, through Jan. 3, 2000, actually simulating
the date rollover and settlement time. Other markets include more dates -- for instance, the options beta test will include
expiration on Jan. 22, 2000.
The Securities Industry Association (SIA), which is organizing the tests, has said the dry runs will not only check for
programming glitches but will also function as a ''test of the test,'' making sure the battery actually works before the SIA
launches Street-wide in March 1999.
John Panchery, an SIA vice president of systems and technology in charge of the test has said it will take about six months to
make absolutely sure the beta test worked properly before it goes national.
The test's most serious flaw seems to be the fact that it tests only for the date roll-over and not for volume.
Participants are also trying to keep expectations low, stressing that the test is designed to show as many flaws in the networks
as possible, and could possibly show problems that the experts did not notice before.
''The question is not if things will go wrong, but how many things will go wrong,'' J.P. Morgan chief information officer Peter
Miller said before a U.S. Senate committee meeting held in New York last week.
Which is why many firms are also drawing up contingency plans. Merrill Lynch has said it will no longer do business with
brokers that do not show any improvement after the industry-wide testing.
More severely, U.S. Securities and Exchange Commission director Richard Lindsey told the Senate panel meeting that Wall
Street brokerages would see ''severe consequences'' if they did not address Year 2000 issues.
The fourth quarter of 1999 is ''the point of no return,'' he said. ''If there are firms that are not ready by then, we would make
preparations to take away their licenses and relocate their accounts'' to other firms that were millennium-compliant.
Even small firms with limited resources need to start tackling the problem now. ''Everyone has to be prepared,'' the SIA's
Panchery said.
The securities industry as a whole is estimated to be spending up to $6 billion in an extensive program to ensure computer
systems will not crash.
More Quotes
and News:
JP Morgan & Company Inc (NYSE:JPM - news)
Merrill Lynch & Co Inc (NYSE:MER - news)
Reuters Group PLC (Nasdaq:RTRSY - news)
Related News Categories: US Market News
Help |
