Wall Street Firms Invest in Testing Computers for ‘Millennium Bug’
Wall Street’s major exchanges and securities firms Monday began the most ambitious test yet of how well their computers will handle the transition to 2000.
The test, sponsored by the Securities Industry Assn., is an attempt to determine the impact of the “millennium bug,” which could cause computers that recognize only the last two digits of a year to malfunction or fail.
After months of testing their own systems, 12 exchanges and 29 Wall Street firms all set test computers Monday to Dec. 29, 1999. They made mock trades of stocks, bonds and options to see how well their systems handle trades that will settle on Jan. 3, 2000, the first business day of the next century.
Over the next two weeks, the systems also will test trades occurring on Dec. 30 and 31, 1999, and Jan. 3 and 4, 2000.
“We’re testing the entire life cycle of a trade,” said Len DeTrizio, a J.P. Morgan & Co. executive who is in charge of the computers that support the company’s equity trading.
The tests are a precursor to experiments involving all Wall Street firms next March.
“Because it is a fairly complex undertaking and we’ve never done this before, we needed a dress rehearsal,” said Donald Kittell, executive vice president of the industry group.
The firms involved in the test account for about half of the trading volume on Wall Street and will give the industry a good idea of how successful it has been in addressing the millennium bug.
Participants include Wall Street heavies Merrill Lynch & Co., 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. All underwent internal testing before they could take part.
The tests involve stocks, options, corporate bonds, municipal bonds, mutual funds and other areas. Money markets will be tested Sept. 17 and the futures industry beta test will start Sept. 12.
The equities test, which runs through July 22, will send orders dated Dec. 29, 1999, through Jan. 3, 2000, simulating the date rollover and settlement time. Tests of other markets will include more dates. For instance, the options beta test will include expiration on Jan. 22, 2000.
Participants are trying to keep expectations low, stressing that the test is designed to show as many flaws in the networks as possible and may show problems that escaped experts’ notice before.
The securities industry is estimated to be spending up to $6 billion through next year to address the millennium problem.
Associated Press and Reuters were used in compiling this article.
