Few glitches were reported Monday in a test by the Securities Industry Association designed to take year-2000 compliance to a higher level.
The SIA said fewer than 1% of the trading failures that surfaced in the four-day test were year-2000 related.
The test, which cost $3 million to administer, was designed to ensure that compliance is maintained when transactions are executed between systems of different organizations. Such testing goes beyond an institution's requirement to make its internal systems compliant.
"Probably the most important finding of the test is that the infrastructure of the organizations representing the stock exchanges and depository organizations demonstrated that they were able to process whatever trades were given to them by the participants," said Don Kittell, SIA executive vice president.
The SIA test is similar to those being conducted by the Federal Reserve to ensure that banks' connections with the central bank for funds transfers, automated clearing house operations, and other transactions remain compliant as they flow through various interfacing systems.
About 200 banks have successfully processed a variety of Fed services in the system's year-2000 test lab, said Carl Gambs, century date-change project leader and Denver Fed senior vice president.
Mr. Gambs said he did not know how many banks failed to connect with the Fed, but he added he had not heard of any problems. All 12,000 banking and depository institutions are expected to sign up for the test lab this year and in 1999, he said.
The SIA test simulated a trading cycle-from order-entry to settlement. About 10% of the trades failed, mostly because of glitches in the test setup or connectivity, Mr. Kittell said. The few year-2000-related failures were resolved by day's end, said PricewaterhouseCoopers' Marilyn Hignett, who worked with the SIA on the test.
The 28 firms that participated in the SIA test account for about 50% of the average daily volume on the three major stock exchanges. Thirteen exchanges participated in the test.
The SIA will conduct an industrywide test in March. Though the beta test was successful, securities firms still need to work on bringing their own systems into year-2000 compliance for the March test to succeed, Mr. Kittell said.
"This test doesn't give us grounds for complacency," he said.
The SIA plans to streamline testing procedures to accommodate the more than 1,000 firms that may participate in the March test. The industry group will divide up the firms based on their available resources, such as their ability to set aside computers for simulated date changes. The SIA also will conduct separate connectivity tests in the hope of solving problems before the March test.
Each firm still must test its internal systems and external interfaces for compliance, said Arthur L. Thomas, SIA year-2000 committee chair and Merrill Lynch & Co. senior vice president. Several regulatory bodies are monitoring individual firms' year-2000 efforts.