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Test for Y2K bug not reassuring
By The Associated Press
NEW YORK - A test simulating trading on Wall Street around the start of the millennium showed that some firms with the best resources to overcome year 2000 computer problems couldn't handle the transactions smoothly.
About 1 percent of the trades in the recent test by 28 of the richest securities firms were stymied by year 2000 changes. That suggests the problem could be greater at smaller firms that don't have as much money.
``As you go down to smaller companies that spend less and started later the possible risk of failure is higher,'' Lou Marcoccio, year 2000 research director at the Gartner Group in Westboro, Mass., said.
The firms that participated in the test handle about half of Wall Street's daily trading volume.
Securities industry officials said the firms passed ``with flying colors'' and are well ahead of the game. But they said they won't become too complacent as the industry prepares for a broader test in March.
``We passed this milestone with flying colors but there are many milestones to come,'' said Don Kittell, executive vice president at the Securities Industry Association, which sponsored the test.
The millennium bug could cause computers that are set to read only the last two digits of the year to malfunction or fail when the calendar changes to 2000. Those that aren't fixed may not be able to sort dates, calculate transactions and perform other operations.
In the preliminary test, 28 securities firms, 12 exchanges and processing agencies performed mock trades on four days over a two-week period in late July to determine how Wall Street's vast computerized trading systems will handle the transition. The test was a dress rehearsal for an industrywide simulation in March 1999.
The firms were each asked to execute mock trades as if it were the three last days of December 1999 and Jan. 3, 2000. Each firm executed about 500 trades a day over the four testing days. The transactions included stocks, bonds and options.
The stock exchanges and securities processing firms passed the simulated arrival of the millennium on Wall Street without a glitch - handling the trades without any year 2000 computer problems. But the road wasn't as smooth for the trading firms.
The firms failed to complete about 1 percent of the transactions because of year 2000 related problems. And some of them, according to some industry officials, did their own dress rehearsals of the trades internally prior to the testing - giving them an advance opportunity to fix any glitches.
Officials from the Securities Industry Association said at the end of the test only about two or three of the 28 firms had trades that couldn't be completed because of year 2000 problems. But they couldn't say how many firms experienced millennium bug problems that were corrected during the test.
``If they had some problem in the kitchen we wouldn't know about it. What we honestly learned was that the year 2000 problem was really small,'' said James O. Spellman, a spokesman for the industry group.
In one year 2000 problem, officials said, a firm's computer interpreted the arrival of the millennium as 1999.
The securities industry will spend between $5 billion and $6 billion through 1999 to fix the bug. Gartner estimates that U.S. private companies will spend as much as $600 billion.