TO THE BUSINESS EDITOR
FOR IMMEDIATE RELEASE

8 April 1999

The second round testing on Year 2000 compliance in the securities and futures sector has been completed with positive results.

Member firms, participants, and designated banks of the Stock Exchange of Hong Kong, Hong Kong Futures Exchange, Hongkong Clearing, Stock Exchange Options Clearing House, and the HKFE Clearing Corporation took part in the second round street-wide test held in March 1999. The Securities and Futures Commission was responsible for co-ordination.

The objective of the street-wide tests is to provide facilities for member firms and participants to verify the Year 2000 compliance readiness status of their business operations and back office systems, including hardware and software, that interface with the exchanges and clearing houses.

The latest test was carried out on 20, 21, 27 and 28 March 1999, testing respectively the dates of 30, 31 December 1999, 4 January 2000, and the leap year day of 29 February 2000.

So far, over 95% of all members and participants have taken part in the two rounds of testing. The remainder mainly represents members and participants who use manual systems or whose businesses are inactive.

In the second round testing, initial assessments by the exchanges and clearing houses on the major shared financial systems and their interfaces with member firms and participants showed encouraging results with no major incidents. Some minor incidents not related to Year 2000 compliance were identified and quickly resolved during the test.

As to the compliance status of member firms and participants who have taken part in the second round testing, the exchanges and clearing houses are still awaiting the formal submissions by the individual firms and participants. Full test results will be analysed and further reports will be submitted to the SFC by the exchanges and clearing houses by early May 1999.

Regarding the results of the first round street-wide test held in January 1999, over 95% of member firms and participants have declared no major exceptions in their test results. Follow-up actions are being taken by the exchanges and clearing houses to monitor the progress of those firms which had been unable to deliver satisfactory results. All members and participants are required to make a declaration regarding their Year 2000 compliance status as of 31 March 1999 in April 1999.

The SFC, the exchanges, and clearing houses all regard the Year 2000 issue a very serious matter. Regulatory measures and disciplinary actions may be taken against registrants, member firms or participants who fail to ensure their systems are Year 2000 compliant by the key milestones set by the SFC, the exchanges and clearing houses. To adequately prepare for the century changeover, registrants, member firms and participants are also required to put in place proper contingency plans for their business.

The following summarises the major test information so far:

Meanwhile, the SFC, the exchanges and clearing houses have completed or are in an advanced stage of completing the rectification of their own internal systems, and have commenced the contingency planning process.

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