Newspaper article THE JOURNAL RECORD

Wall Street Set to Run Test on Securities for Year 2000 Woes

Newspaper article THE JOURNAL RECORD

Wall Street Set to Run Test on Securities for Year 2000 Woes

Article excerpt

NEW YORK -- Wall Street is going back to the future. On Saturday, about 400 brokerage firms, banks, exchanges and other institutions will push the clocks on their computers forward to Dec. 29 as the first stage in a full-scale test of their readiness to trade stocks, bonds and other securities in the Year 2000.

Just as in July, when a core group of 28 Wall Street firms performed a trial run, the meticulously scripted tests will cover the first trades to settle in the new year, including options that expire Jan. 22. Because the $270 billion securities industry has been a pacesetter in dealing with potential Year 2000 computer problems and the July experiment went well, any major disruptions found in the tests would puncture recent optimism that banks, utilities and other critical parts of the business infrastructure can make the transition to next year without significant breakdowns.

The Year 2000 problem stems from the longtime practice of programming dates in computers with two digits for the year, like 99 for 1999. Some computers and software interpret 00 as 1900 instead of 2000 and others cannot interpret 00 at all, leading to crashes or faulty data. Securities companies began dealing with such problems sooner than most, partly because the need to handle long-term loans and bonds had alerted them to the hazards of two-digit coding. Domestic securities firms will end up spending $5 billion to correct the problems, according to the Securities Industry Association, which has been coordinating correction and testing efforts since 1996. The new round of tests will cost the association about $10 million and the participants as much as $100 million, according to Donald Kittell, executive vice president of the association. About 5,000 people will be involved. "This is a dress rehearsal for the real event," Kittell said. "We expect to come through with flying colors." In addition to involving many more brokers and much higher volumes than the trial run in July, the new tests will add about 30 large and small pension fund managers and other institutional investors into the mix. …

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