Re: Compliance

John Boyer (johnboy@CreativeSysInc.com)
Tue, 05 May 1998 23:30:31 -0500


Forget 2K compliance! What about the more pressing 10K problem!
I thought this was a joke when I first saw it. But it is in the Financial
Times
http://www.ft.com and made a few papers around the US. Still, I think it's
insignificant,
compared to the armadillo crisis in Texas. Not to mention the beaver
problem in Alabama.
Johnboy

[from financial times]
BANKS: Digital alert as Dow nears 10,000 mark
By Paul Taylor in London

Computers at banks and other financial services companies could be
disrupted if the Dow Jones Industrial Average tops 10,000, warn industry
analysts. Much of the computer software written for financial organisations
that trade and track the US blue-chip index can deal only with four-digit
Dow figures. It was not designed to cope with the extended bull market
rally on Wall Street or the growth of computerised trading, said Gartner
group, the computer consultants. Many banks and financial services
companies are already struggling to cope with the Year 2000 problem, which
threatens to disrupt computers at the end of next year because they will
not recognise the date.

When the Dow moves into five digits, some systems will misinterpret the
10,000 figure. The Dow took 15 years to move from 1,000 to 2,000 and closed
above 9,000 for the first time on April 6 this year. The index yesterday
reached 9,212 in early trading. "Trading organisations face potential
massive exposure if the DJIA passes 10,000 and their systems interpret it
as 1,000 or 0,000," says Andy Kyte, the Gartner Group consultant who has
highlighted the new risk. "Computer-based trading systems could interpret
the 10,000 event as a catastrophic crash," said Mr Kyte. This could prompt
computers to launch programs that would automatically sell their portfolios
or make mistakes on their calculations.

"This is a real and present threat," he said. There was little evidence
that software developers inside financial institutions had even begun to
assess the risk, Mr Kyte said. "Application development teams in financial
services organisations already face tremendous pressure," he said. "They
have to deal with the looming year 2000, many are grappling with the euro,
and decimalisation of securities' prices is just over the horizon. At the
same time trading floors are demanding faster systems, new data feeds and
analysis tools." Mr Kyte said one large multinational bank has had to
divert IT staff away from millennium compliance work because of the new
problem. However, according to ZDNews, the web-based IT news services, most
banks are either unaware of the problem, or unwilling to comment on it.

Mr Kyte said that although the year 2000 problem was an immovable deadline,
at least there had been clear warning and a schedule to deal with it.
"Nobody knows when the Dow Jones Industrial Average will hit 10,000:
however, one thing is clear, many IT systems cannot take the average beyond
10,000," he said. He advised banks and other organisations that use stock
exchange data to set up a crisis management team immediately to identify
whether they were vulnerable to the DJIA 10,000 problem. "Teams should
behave as though the barrier could be breached tomorrow," said Mr Kyte.