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August 11, 1998

SECTION: News

LENGTH: 528 words

HEADLINE: China- Chinese tackle millennium bug problem

BODY:

THE China Securities Regulatory Commission has established a special task force to solve possible year 2000 computer problems for exchanges and brokerages.

With the millennium bug threatening computer systems worldwide, the commission hopes to to speed up efforts to solve the problem in the securities and futures industry.

Only five month are left for China's futures industry to resolve the problem because exchanges and brokerages must eliminate the bug before January 16, 1999, when futures contracts maturing in January 2000 are listed.

Securities exchanges and traders seem to have a little more time because they have 17 months to meet the challenge.

The commission will lead a pilot test next month in an effort to identify problems and find solutions.

A systemwide test covering all securities and futures exchanges and brokerages will be conducted in November to check the solutions.

The futures sector will have a comprehensive test January 2-3 aimed at solving the millennium bug problem while a test in securities exchanges during the Spring Festival holidays in February next year is also planned.

The commission has already set related technical standards for the tests.

Experts said the problem, if not solved, may paralyze computer systems in China's securities or futures markets in 2000.

Industry experts called efforts to deal with the problem a kind of war which could affect brokerages in the 21st century.

Experts explained that many old-model computers read the year as two digits, such as 98 instead of 1998. Those computers will misinterpret 00 as 1900, rather than 2000.

On the first trading day of 2000, computer systems in the exchanges may not find final share prices of the last trading day and may refuse to open the market.

The millennium bug is also likely to swallow historical data of some brokerages, resulting both in a loss of investor interest rate payment records but also losses of systems information.

The securities industry worldwide is alarmed about the problem.

The Stock Exchange of Hong Kong last week announced it will conduct a pilot test in December 1998 to deal with the millennium bug problem.

The commission task force issued a notice last month asking Chinese futures and securities employees to pay special attention to the problem which could decide whether China's securities and futures industries can smoothly enter the 21st century.

The commission advised the industry to conduct thorough investigations and tests and to consider technical upgrading.

The commission will suspend activities of companies that fail to solve the problem before the required date. Stock and futures exchanges are required to conduct tests during closing times starting March 1999.

Experts said the commission has every reason to make demands of the brokerages. The China Southern Securities Co Ltd launched a check on its computer system in May and found a computer purchased in 1994 failed the test.

China Securities Co Ltd has established a working team with four specialists in planning and co-ordinating work in this field.