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Comment: |
Market Partners, Inc., sells y2k services to banks. Here is an extract from a paper on the problems facing the banks. It focuses on the securities industry.
When your securirties firm says it's compliant -- on letterhead stationery -- consider the fact that every link in the system must be compliant.
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Take the following scenario -- a securities trade transaction. A trade will involve many firms over the course of three days to complete processing. Information must pass between these third-party organizations and proprietary systems before the trade is successful. In processing the trade, data will be sent and received between various entities, involving the customer, the administrator, the trading desk, brokerage providers, utility providers (DTC, NSCC, and other interested parties), clearing banks, custodian banks, beneficiaries, and exchanges. Critical calculations are derived based upon timing of the transaction, including the calculation of interest, generating margins, applying valuations, commissions, settlement, clearing of funds, and disbursement. The Year 2000 related risks created from this scenario have significant business ramifications. A single point of failure could generate a chain reaction which could cause huge operational implications within the institution, resulting with failed trades, incorrect posting, manual intervention, unfulfilled contracts, angry customers, and lack of confidence for the institution by its shareholders.
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