Hopes for early electronic trade diegreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Wednesday, September 15, 1999 Hopes for early electronic trade die
Nearly all hopes of the futures exchange being able to shift Hang Seng Index (HSI) futures and options to electronic trade this year have been dashed by the discovery of new problems with its trading system.
The latest setbacks occurred during the ninth test of the Hong Kong Automated Trading System (HKATS) on Saturday, said William Grossman, the exchange's acting chief executive.
Some brokers were temporarily disconnected from HKATS during the test, he told brokers yesterday.
In addition, some trades got hung up during the test.
The errors are likely to prevent the futures exchange from moving the HSI futures and options from open-outcry trading before the end of the year.
The Government is understood not to want any computer-related projects to be launched in the fourth quarter to avoid Y2K problems.
Nonetheless, Mr Grossman said the futures exchange "would not give up hope until the last minute".
"We have asked the Government for the last deadline for the migration plan to see if we could proceed with the plan in the fourth quarter," he said.
He said the Government was likely to respond to the futures exchange today.
A futures exchange board meeting is to be held tomorrow to decide whether to postpone the switch to next year. A government source said the shift to electronic trading was not likely to be given the go-ahead this year.
"Even if the exchange could fix the problems with the HKATS soon, it would probably need more tests in October before the migration plan could proceed in November or even December," the source said.
"The futures exchange should take into consideration the impact of the Y2K problem."
The source also said the exchange should undertake an in-depth review of the HKATS to find out why the system failed in the tests.
The exchange missed an August 2 target for the switch to electronic trading because of the failed simulations.
Former chief executive Randy Gilmore resigned earlier this month, and sources have said he was forced to step down because of the delays.
After Mr Gilmore's resignation, the exchange held two more tests in what was viewed by some brokers as a last-ditch effort to push ahead this year.
However, both tests came up short.
On September 4, 29 system delays were reported.
During Saturday's test, some brokers complained their terminals were disconnected from HKATS.
The independent consultant of the exchange, PricewaterhouseCoopers, said the disconnection might be due to a new error in HKATS, but it was still being analysed.
In the test, only 72 per cent of participating brokers were satisfied with the way the simulation went, Mr Grossman said.
The result was similar to that in the previous test.
Mr Grossman said brokers had mixed views about delaying the migration plan to next year.
"Some want to move ahead with the plan this year," he said.
"Some want the exchange to take a more prudent approach to carry out more tests to ensure the system is working smoothly."
Mr Grossman said it would be impossible to carry out any more tests of HKATS by the end of this month.
A Securities and Futures Commission spokesman said it was still waiting for a report on the full results of the latest test.
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-- Homer Beanfang (Bats@inbellfry.com), September 15, 1999