[Congressional Record Volume 144, Number 92 (Monday, July 13, 1998)]
[Senate]
[Pages S8066-S8067]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ADDITIONAL STATEMENTS

                                 ______
                                 

             WALL STREET BEGINS MOCK TRADE TESTING FOR Y2K

 Mr. MOYNIHAN. Mr. President, Yesterday, The New York Times 
reported that Wall Street firms will turn their clocks ahead today to 
December 29, 1999, to begin mock trading in the widest ranging Year 
2000 (Y2K) test yet by any industry. The tests will investigate what 
might happen to anyone trading stocks, options, or corporate and 
municipal bonds on December 30 and 31, 1999, and January 3 and 4, 2000 
(January 1, 2000 falls on a Saturday).
  As a member of the Special Committee on the Year 2000 Technology, I 
am encouraged to see that the financial community is taking the Year 
2000 computer problem seriously. On Monday, July 6, Senator Bennett and 
I held a field hearing in New York to examine the progress of U.S. and 
foreign financial firms in addressing the Y2K problem. At the hearing, 
we emphasized the importance of testing, and the need to begin testing 
by December of this year. Appearing on behalf of the Federal Reserve 
Bank of New York, the First Vice President Ernest T. Patrikis said that 
he ``does not think it is possible to over-emphasize the importance of 
testing to help improve readiness.''
  The hearing last week made it clear that Y2K is a serious and 
pervasive problem confronting the domestic and international economy. 
The Senior Vice President and Chief Technology Officer of the New York 
Stock Exchange, William A. Bautz, said that the Securities Industry 
Association (SIA) refers to solving the Year 2000 computer problem as 
``the biggest business-technology effort that the world has ever 
experienced.''
  I am pleased that SIA is sponsoring this industry-wide test and look 
forward to seeing the results. I only hope that the other industries 
follow the lead of the financial community and start their testing 
soon.

[[Page S8067]]

  I ask that the article from yesterday's Times, ``Wall St. to Roll 
Clock Ahead To See if Year 2000 Computes,'' be printed in the Record.
  The article follows:

                [From the New York Times, July 12, 1998]

       Wall St. to Roll Clock Ahead To See if Year 2000 Computes

                         (By Barnaby J. Feder)

       For computer wizards on Wall Street, tomorrow will be Dec. 
     29, 1999, a step into electronic time travel that will be 
     studied anxiously around the globe.
       After months of preparation, the nation's leading brokers, 
     the major exchanges, clearinghouses and depository companies 
     will begin mock trading in the widest-ranging test yet by any 
     industry of how well computers will cope with the transition 
     to the next century.
       The tests, sponsored by the Securities Industry 
     Association, are designed to help brokers and other key 
     players in the $270 billion industry figure out whether their 
     computer systems are ready to handle trades that will settle 
     on Jan. 3, 2000, the first business day of the new century. 
     Over the next two weeks, the industry will reset the clocks 
     on the test computers and investigate what might happen to 
     anyone trading stocks, options or corporate and municipal 
     bonds on Dec. 30 and 31, 1999, and Jan 3, and 4, 2000.
       Not much has been left to chance. The multimillion-dollar 
     effort is supervised by Coopers & Lybrand following trading 
     scripts carefully developed by the participants with the help 
     of outside consultants.
       Thus, Leonard De Trizio, the J.P. Morgan & Company vice 
     president in charge of the computers that support equity 
     trading, knows that he will be selling 800 shares of a 
     fictional Big Board company with the ticker symbol KDD at 
     9:30 tomorrow morning, and he knows that Morgan Stanley 
     will be buying it, while Merrill Lynch & Company will be 
     selling Home Shopping Network convertible bonds to Lehman 
     Brothers.
       The participants are looking for signs of the millennium 
     bug, the catchall name for a variety of electronic foul-ups 
     that are likely to occur when computers fail to recognize 
     that the first days of the new century come after the last 
     days of the old one. The problem stems from the way many 
     microprocessors and computer programs use only two digits to 
     refer to the year in dates--98 for 1998, for example.
       Many chips and programs do not accept a low number like 00 
     for the year 2000, or 01 for 2001 as valid dates that follow 
     the 99 for 1999.
       What complicates the problem is that computers often react 
     in unpredictable ways. Some spew inaccurate data. Others 
     appear to function normally but then cannot be restarted once 
     they have been shut down.
       Computer specialists have talked about the millennium 
     problem for decades. But only recently have businesses and 
     public officials begun to recognize how widely dates are used 
     in computing and to take seriously warnings that the dawn of 
     the new century could see widespread disruptions in daily 
     life, at the very least, and deadly accidents or perhaps a 
     global economic recession if the problem is not tamed.
       Because the securities industry is the first to conduct 
     tests involving connections between many computer users and 
     is publishing vast amounts of data about the results on its 
     World Wide Web site (www.sia.com), year 2000 experts say that 
     the results of these tests could have a huge effect on morale 
     in the rapidly growing legions of specialists working on the 
     problem.
       ``It's good that they are setting a standard of openness 
     for the entire corporate sector,'' said Edward Yardeni, chief 
     economist of Deutsche Bank Securities. Mr. Yardeni has become 
     one of the highest-profile year 2000 pessimists, predicting a 
     70 percent chance of worldwide recession stemming from 
     computer problems related to the millennium.
       ``If it goes badly, though, corporations may be more 
     reluctant to share information, and more people are going to 
     come around to my view of the risks,'' Mr. Yardeni said.
       Those managing the securities tests are discouraging any 
     attempt to draw broad conclusions from them. The managers 
     point out, for example, that the tests will deal with very 
     small volumes of fictional securities, and they describe the 
     exercise as a mere dress rehearsal for high-volume tests 
     planned for next spring. Some major computer systems have 
     been completely excluded, including those that manage 
     dividends and interest, margin trading and client account 
     records. In addition, only the most common types of trades 
     and securities will be tested this week.
       ``Dealing with this isn't rocket science, but there is a 
     mountain of details,'' said Donald Kittell, the association's 
     executive vice president. ``People don't realize that a trade 
     may go through 40 to 50 steps from start to finish.''
       The securities companies participating in the test that 
     starts tomorrow account for about half the trading volume in 
     stocks, bonds, options and other financial instruments. Each 
     agreed to set up a discrete computer operation to run the 
     tests. In the United States alone, securities companies are 
     expected to spend $3 billion to $5 billion addressing year 
     2000 and related problems.
       Yet, when the millennium arrives, Wall Street's ability to 
     function will depend not just on the internal systems it 
     began to test today but on the preparedness of markets 
     overseas, where many players offset any bets placed 
     domestically.
       What is more, Wall Street's success at ushering in the 
     millennium will also depend heavily on the year 2000 
     readiness of New York's power, water and telecommunications 
     utilities and of countless other systems that are beyond its 
     ability to test.
       All of this underscores what many computer experts consider 
     one of the most troubling aspects of the year 2000 challenge. 
     Each phase of the problem--from identifying vulnerable 
     systems to figuring out remedies to testing fixes--has proved 
     more complicated, time-consuming and expensive than had been 
     expected. The emerging consensus has been that testing has 
     been the most widely underestimated challenge.
       Consultants are consistently warning that very few 
     corporations, government agencies or other computer-dependent 
     enterprises will end up having enough time and resources to 
     do as much testing as they should.
       ``It would be a setback if this doesn't go well,'' said 
     William Ulrich, a year 2000 consultant in Soquel, Calif., 
     ``because these guys are way out in front.''

                          ____________________