Y2K-- Try this--E*TRADE Year 2000 Readiness Disclosure
E*TRADE launched its Year 2000 Project at the beginning of fiscal year 1998 to comply with all NASD and SEC rules and regulations regarding the Year 2000 (Y2K) problem, and to ensure that all E*TRADE services, products, hardware, software, and third-party relationships are Year 2000 ready.
Problem Definition
The Year 2000 problem exists because of the way that dates are recorded and computed in many computer systems. For the past several decades, systems have typically used two digits to represent the year, such as "97" to represent 1997, in order to conserve electronic data storage space, reduce operating costs, and speed calculation. With this two-digit format, however, the year 2000 is indistinguishable from the year 1900, 2001 from 1901, and so on. The logic written to perform date arithmetic seldom accounts for the year 00. As a result of this ambiguity, systems or application programs that use dates to perform calculations, comparisons, or sorting may generate incorrect results when working with the years after 1999, or may stop working altogether.
It is a significant challenge across the Information Technology industry for any business, agency, institution, or individual using a computer. Any system or program, including desktop software, could be affected if two digits are used to represent a year. In some cases problems may begin to occur even before 2000.
E*TRADE Year 2000 Project
The E*TRADE Year 2000 Project is following a structured methodology to analyze and mitigate Year 2000 problems. Steps include awareness, assessment, remediation, validation, implementation, and industry-wide testing.
The E*TRADE Year 2000 Project plan is to identify core business processes and associated computer systems and equipment that automate or support those core business processes. Once identified, the systems and equipment are rated for risk. The next step is to prioritize systems for assessment and, if necessary, conversion or replacement, according to the impact on core business operations. Appropriate action (repair, replacement, retirement, or no action) is then taken for each system identified.
The E*TRADE Year 2000 Project also addresses E*TRADE's third-party relationships (suppliers of goods and services, business partners, and data providers) to assess their ability to meet the Year 2000 challenge.
Year 2000 Readiness Definition
Year 2000 compliance means that neither the performance nor functionality of E*TRADE systems will be affected by dates before, during, and after the year 2000. Specifically:
No current date, however valued, will cause any interruption in operation.
Date-based functionality will behave consistently when dealing with dates before, on, or after January 1, 2000.
No abnormal endings or incorrect results will be produced when using E*TRADE's products and services while working with dates before, on, or after January 1, 2000.
In all interfaces and data storage, the century will be specified explicitly or unambiguously derived.
Year 2000 will be recognized as a leap year.
Third-Party Tracking Process
E*TRADE has implemented a third-party management program to assess the ability of our third-party relationships to meet the Year 2000 challenge. This effort is necessary to ensure that all E*TRADE suppliers of goods and services, business partners, and data providers are also Year 2000 ready.
To accomplish this, Year 2000 Certification Letters were sent to essential suppliers, business partners, and third-party data providers. The business or technical owner of the relationship will contact third parties that do not respond to the Certification Letter. Relationships with third parties that do not respond-or that provide insufficient information to make an assessment as to their readiness-will be evaluated for risk before the business relationship is continued.
Status of E*TRADE's Year 2000 Project
As of 8/31/99, all E*TRADE mission critical systems are Y2K ready. As of 9/30/99, E*TRADE has completed validation testing of critical software and equipment. The company is in the process of implementing a contingency plan if, after December 31, 1999, problems are caused by the Year 2000.
For more information, please read through the E*TRADE Year 2000 Q&A.
Year 2000 Readiness Disclosure Note: The information contained above is designated as a YEAR 2000 READINESS DISCLOSURE as that term is defined in the YEAR 2000 Information and Readiness Disclosure Act, and is current as of August 31, 1999. The information contained in this document contains forward-looking statements that reflect E*TRADE's projections for its Year 2000 Project. E*TRADE believes that the contents of this Year 2000 Readiness Disclosure are accurate as of the date indicated. However, this disclosure does not constitute a guaranty or convey any further rights than you already may have. The information provided is subject to change without notice. E*TRADE undertakes no obligation to update this information even if it changes. E*TRADE does not warrant or represent that you will be unaffected by the Year 2000 issue.
E*TRADE Year 2000 Q&A
What is the Year 2000 problem and how did it happen?
The Year 2000 problem, often referred to as the "Millennium Bug," is both a technical issue and a business problem. Simply stated, the Year 2000 problem is that computers typically have been programmed to use a two-digit number, instead of a four-digit number, to represent the year for any date.
Computer programs used two digits to save space and time. Although this practice was common, it can lead to incorrect results whenever computer software performs arithmetic operations, comparisons, or date sorting involving years later than 1999.
The problem can also affect facilities, utilities, and office automation equipment ? fax machines, phones, and security and elevator systems.
Why didn't the Information Technology (IT) industry foresee from the beginning that two-digit year fields would be a problem and use four digits to represent the year?
In the 1960s when the decision to use two-digit years was being made, electronic data storage was extremely expensive ($600,000 per megabyte vs. 10½ today) and there were few data storage options.
Also, many of the people who began writing programs in the 1950s and 1960s were in their twenties and thirties. It was hard for them to imagine that the systems they were developing would outlast them. Most people expected that systems would last five to ten years and then be retired.
However, instead of systems being retired, they were modified and enhanced.
As more and more systems were developed, programmers had to continue using the two-digit format in order to maintain backward compatibility with systems already in place.
In addition, developers often reused code in order to save time and money and eliminate potential errors. The result was that "standard date routines" used for handling dates, and date calculations became ingrained in IT organizations.
When managers thought about the looming Year 2000 problem (if they thought about it at all), they knew that fixing it would be costly and time-consuming. Money was never budgeted for the project because it would not directly improve the organization's bottom line. Management chose not to allocate resources for this problem until the impending disaster could no longer be ignored.
Therefore, the "Millennium Bug" is not a bug at all but a result of design decisions made decades ago based on costs and other factors.
Who does the Year 2000 problem impact?
The Year 2000 problem is a significant, worldwide challenge across all business and industry lines for any company, social or government agency, institution, or individual using computers or other automated applications and systems. Any system, program, or equipment?including desktop PCs and software?could be affected whenever only two digits are used to represent a year.
What could happen if the Year 2000 problem isn't corrected?
Any system or application that performs a calculation or process involving a date?such as credit card transactions, electric company statements, and payroll and mortgage calculations?could yield incorrect results.
Isn't there some clever way to fix the problem or some sort of "silver bullet"?
Unfortunately, there is no simple answer or quick fix. The sheer volume and variety of ways in which dates are used means that there is no quick answer. Even in those cases where the process of making changes to systems is straightforward, the whole process of finding the dates, checking, changing, and then testing the changes is very time-consuming because:
Each and every use of a date in a system must be identified and not all dates are obvious. For example, dates are often part of a file name or the key to a record.
The complete system must be thoroughly checked.
All the databases need to be checked and converted to a four-digit date.
Some older hardware may need to be completely replaced because internal clocks will not be compliant.
Do I need to worry about my own PC?
Yes. Failures can occur because the computer's BIOS (basic input/output system) doesn't properly handle a four-digit year value. Failures can also occur if the real-time clock (RTC) chip maintains a millennium value when the year rolls over from 1999 to 2000.
You should review your system's user manual or, if necessary, contact the vendor or sales representative to determine whether your PC will correctly handle dates in the year 2000. Some simple tests can be performed on your home PC to test the BIOS and RTC. However, we recommend you obtain professional, knowledgeable assistance in performing these tests.
What is E*TRADE doing to meet Year 2000 issues?
E*TRADE launched a company-wide Year 2000 Project plan in 1998 to address Year 2000 issues across all potential impact areas including business systems, technical infrastructure, buildings, suppliers, and business partners. All systems, whether internally developed or maintained by the third-party data processing vendors, all hardware, and all key vendors and business partners will be evaluated to determine if they are Year 2000 compliant. Read the E*TRADE Year 2000 Readiness Disclosure for more detail.
How can I be assured that my interest and dividend payments will not be affected on January 2000?
All members of NASD, including E*TRADE, participated in industry-wide testing during the first quarter of 1999. The testing encompassed a variety of transactions including various buying and selling scenarios, payment of interest and dividends, etc. The testing was designed to uncover any problems that could occur and allow ample time to fix them. E*TRADE's participation in these tests did not identify any problems.
What will happen if I want to sell some stock in December 1999 or early January 2000 and E*TRADE or some other market participant is having computer problems?
We do not anticipate that there will be any problems. However, because E*TRADE's method of trading is heavily dependent on the integrity of electronic systems outside of our control (e.g., online and Internet service providers, third-party software, etc.), a failure of any such system in the trading process even for a short time could indeed cause an interruption in our business and possibly delay a trade.
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