Y2K Compliance and Street-Wide Testing

March 29, 1999 PSE MEMO FOR BROKERS NO. 131-99 SUBJECT : Y2K Compliance and Street-Wide Testing The Board of Governors, recognizing the need to ensure the Y2K readiness of all market participants (PSE, PCD, SCCP, member-brokers and settlement banks) has decided to continue the conduct of a series of integration or Street-Wide Test (SWT) to be concluded before the end of this year. These SWT's intend to cover the complete cycle of trading, backroom operations and settlement activities and to verify that the mission critical trading-related systems and the interfacing between these systems of market participants are all Year 2000 ready. cdlex In line with this, the Board in its 24 March 1999 meeting has approved the implementation of the following: 1) The Exchange shall conduct at least three sets of Street-Wide Tests scheduled as follows: a) Second and Third weeks of April (15, 16, 17, 22, 23, 24 April) b) First and second weeks of July c) Third and fourth week of September Each SWT test set will consist of four (4) weekdays of mock trading and two (2) Saturday mornings of PCD settlement testing. (Please see the attached detailed activities.) This schedule is a departure from the first scheduled SWT after considering the comments of brokers that trading personnel should be spared from coming to the trading floors on weekends. PCD testing will just be attended by backroom personnel. 2) Brokers participation in all the SWT mock trading shall be mandatory. Brokers who do not participate shall be penalized P2,500 per day of non-participation. 3) Brokers will submit the required checklist showing the result of their test, including an original printout of their automated back office system duly certified as an original printout by the firm's President and Operations chief. The BROKERS shall then certify themselves as Y2K-ready based on the result of the test and these submitted documents. 4) A member-broker who has passed one of the scheduled SWT will not be required to submit the required checklist and attachments for the subsequent SWTs although they will still be required to participate in the tests if only to simulate the trading environment for the other brokers who are still to be certified Y2K-ready. 5) A broker whose system is still non-compliant may request the Exchange for another test provided he pays the cost of conducting another simulation test. Brokers who will not be Y2K ready by the end of this year will not be allowed to trade starting January 3, 2000 until they are certified as Y2K-ready. This is to preclude a systemic failure from brokers who cannot settle (pay due from brokers or deliver shares to PCD) as a result of a broker system failing due to Y2K problems. Copies of the Test Guidelines and the sample Test Scripts can be requested from the Trading Floor Help Desk at Tektite and Ayala. File copies can also be downloaded from the Y2K directory of our electronic Bulletin Board System (BBS) at tel. nos. 634-5036 & 634-8661, or from our FTP site at the address ftp:/202.163.238.3. For inquiries, please call the undersigned or Mr. Efren Siron at telephone nos. 637-8810/891-9043 for Maktrade System matters and Ms. Rio Raymundo at 893-5636 for PCD System matters. (SGD.) JOSE LUIS U. YULO, JR. President ATTACHMENT Philippine Stock Exchange, Inc. Y2K Street Wide Test Guidelines 1st Quarter 1999 I. Introduction The Philippine Stock Exchange, Inc. in its continuing effort to ensure Y2K readiness before the start of the new millennium will be conducting the second series of integration or street-wide testing in March. The objective of the Y2K Street Wide Test is to verify whether the trading-related systems of market participants (PSE, PCD, member-brokers, settlement banks, data vendors, and others) and the interfacing between these systems are all Year 2000 ready. The testing shall still be conducted for the complete cycle of trading, backroom operation, and settlement for dates identified as critical during the millennium transition. It is also the objective of the Street Wide Test to provide an environment which can be used by brokers to verify the Y2K readiness of their Back-Office Systems. However, this should not be viewed as an extensive test bed for all testing needs of member-broker's systems. Since brokers may have different types operation and may be using different types of computer systems, it is the responsibility of member-brokers to develop appropriate test procedures based on their requirements. Therefore, completion of the Street Wide Testing does not and should not imply that the member-broker's systems were certified by the Philippine Stock Exchange. LexLib II. Street-Wide Testing Dates The second Street Wide Test will be conducted on two Thursdays and two Fridays which cover 15, 16, 22 and 23 of April 1999. All brokers are encouraged to participate in the test. The schedule is as follows: Date Year 2000 Date to Description be Tested April 15, 1999 December 24, 1999 Mock Trading only Brokers (Thursday) to enter orders that will settle on 2:30 p.m. 4:50 p.m. Jan. 3, 2000. April 16, 1999 December 28, 1999 Brokers to enter GTC orders (Friday) that should still be active on 2:30 p.m. 6:30 p.m January 3, 2000. January 3, 2000 Brokers to enter trading data to test first trading day of the year 2000. April 22, 1999 February 23, 2000 Brokers to enter orders that (Thursday) will settle on February 29, 2000 2:30 p.m. 4:50 p.m. April 23, 1999 February 29, 2000 Brokers to enter trading data (Friday) to test the leap day 2:30 p.m. 4:50 p.m. in February 2000. III. Test Procedures Plan In the Y2K Street Wide Testing, PSE will be providing a production-like on-line trading environment wherein brokers can enter their transactions through trading floor terminals, offsite Maktrade terminals and CFE trading terminals. PSE will change its system date to the Y2K date to be tested and will centrally set the date of all trading floor and offsite Maktrade terminals. Brokers with CFE and with Back-Office Systems should also change their system date to the corresponding Y2K test date. Moreover, brokers should conduct their testing in a production-like environment and should follow their actual daily operational procedure. The initial trading data that will be used during the Y2K Street Wide Testing is as follows: Year 2000 Date to be Tested Initial Trading Data to be Used December 24, 1999 Closing of April 15, 1999 trading December 28, 1999 Closing of April 16, 1999 trading January 3, 2000 Closing of April 16, 1999 trading February 23, 2000 Closing of April 22, 1999 trading February 29 2000 Closing of April 23, 1999 trading Member-brokers should setup their initial trading data accordingly. Preparation The following are the preparatory activities that should be done by member-brokers with CFE and/or Back-Office Systems before the testing dates: 1. Study these systems and operational procedures before testing because their data might be affected by the test. cdll 2. Prepare a backup of the production systems especially, backup of databases is recommended before testing. 3. Formulate procedures for restoring backup to ensure successful retrieval of production data. 4. Change the dates of these systems before testing and bring them back to the actual date after each test. 5. Prepare an appropriate and a detailed test script (please refer to the attached sample test script) If there are any queries with regards to these systems, please seek assistance from the vendors who supplied it. Daily Schedule The following timetable for the trading periods will be used: Test Date : April 15,1999 (Thursday) Year 2000 date to be tested : December 24, 1999 Activity Time Responsible 1. Change system date and start-up 2:30-3:00 PSE application of the following Trading Personnel Trading System Servers Broker w/ CFE Trading Floor and Remote Data Vendors Terminal PCs Broker's CFE Systems Data Vendor Feed 2. Pre-Open Period 3:00-3:10 Brokers Trading Brokers to enter pre-open orders Personnel 3. Open Period Brokers to enter mainboard and 3:10-4:10 Brokers Trading oddlot orders at market prices Personnel Brokers to enter deals (mainboard cross, Oddlot cross, special block cross and two-firm oddlot) 4. Run-off Period Brokers to enter mainboard and 4:10-4:20 Brokers oddlot orders at closing prices Trading Personnel Brokers to enter deals (mainboard cross, Oddlot cross, special block cross and two-firm oddlot) 5. Market Close 4:20 6. Print/Save Transactions 4:20-4:50 Trading Personnel (reference for Jan. 3, 2000 settlement) 7. Generate Data for PCD and 4:20-4:30 PSE Settlement Banks 8. Send data to PCD/Settlement 4:30-4:50 PSE/PCD/Banks Banks 9. System Shutdown 4:50 PSE Test Date : April 16, 1999 (Saturday) Year 2000 date to be tested : December 28, 1999 Activity Time Responsible 1. Change system date and start-up 2:30-3:00 PSE application of the following Trading Personnel Trading System Servers Broker w/ CFE Trading Floor and Remote Data Vendors Terminal PCs Broker's CFE Systems Data Vendor Feed 2. Pre-Open Period 3:00-3:30 Brokers' Trading Brokers to enter mainboard Personnel GTC orders 3. Market Close 3:30 4. Print/Save Transactions (reference 3:30 - 4:00 Brokers' for Jan. 3, 2000 GTC orders) Trading Personnel 5. System Shutdown 4:00 - 4:10 PSE Test Date : April 16, 1999 (Saturday) Year 2000 date to be tested : January 3, 2000 Activity Time Responsible 1. Change system date and start-up 4:10-4:40 PSE application of the following Trading Personnel Trading System Servers Broker w/ CFE Trading Floor and Remote Data Vendors Terminal PCs Broker's CFE Systems Data Vendor Feed 2. Pre-Open Period 4:40-4:50 Brokers Trading Brokers to enter mainboard orders Personnel 3. Open Period 4:50-5:50 Brokers Trading Brokers to enter mainboard and Personnel Oddlot orders at market prices Brokers to enter deals (mainboard cross, Oddlot cross, special block cross and two-firm oddlot) 4. Run-off Period 5:50-6:00 Brokers Trading Brokers to enter mainboard and oddlot Personnel orders at closing prices Brokers to enter deals (mainboard cross, Oddlot cross, special block cross and two-firm oddlot) 5. Market Close 6:00 6. Print/Save Transactions 6:00-6:30 Trading Personnel 7. Generate Data for PCD and 6:00-6:10 PSE Settlement Banks 8. Send data to PCD/Settlement 6:10-6:30 PSE/PCD/Banks Banks 9. System Shutdown 6:30 PSE Test Date : April 17,1999 (Saturday) Year 2000 date to be tested : January 3, 2000 PCD System Testing for settlement 7:00-12:00 PCD & Brokers' of trades entered on Backroom December 24, 1999 Personnel Test Date : April 22, 1999 (Friday) Year 2000 date to be tested : February 23, 2000 Activity Time Responsible 1. Change system date and start-up 2:30-3:00 PSE application of the following Trading Personnel Trading System Servers Broker w/ CFE Trading Floor and Remote Data Vendors Terminal PCs Broker's CFE Systems Data Vendor Feed 2. Pre-Open Period 3:00-3:10 Brokers Trading Brokers to enter mainboard orders Brokers Trading Personnel 3. Open Period Brokers to enter mainboard and 3:10-4:10 Brokers oddlot orders at market prices Trading Personnel Brokers to enter deals (mainboard cross, Oddlot cross, special block cross and two-firm oddlot) 4. Run-off Period 4:10-4:20 Brokers Trading Brokers to enter mainboard and Personnel oddlot orders at closing prices Brokers to enter deals (mainboard cross, Oddlot cross, special block cross and two-firm oddlot) 5. Market Close 4:20 6. Print/Save Transactions 4:20-4:50 Trading Personnel (reference for Feb. 29, 2000 settlement) 7. Generate Data for PCD and 4:20-4:30 PSE Settlement Banks 8. Send data to PCD/Settlement 4:30-4:50 PSE/PCD/Banks Banks 9. System Shutdown 4:50 PSE Test Date : April 23, 1999 (Saturday) Year 2000 date to be tested : February 29, 2000 Activity Time Responsible 1. Change system date and start-up 2:30-3:00 PSE application of the following Trading Personnel Trading System Servers Broker w/ CFE Trading Floor and Remote Data Vendors Terminal PCs Broker's CFE Systems Data Vendor Feed 2. Pre-Open Period 3:00-3:10 Brokers Trading Brokers to enter mainboard orders Personnel 3. Open Period Brokers to enter mainboard and 3:10-4:10 Brokers oddlot orders at market prices Trading Personnel Brokers to enter deals (mainboard cross, Oddlot cross, special block cross and two-firm oddlot) 4. Run-off Period 4:10-4:20 Brokers Trading Brokers to enter mainboard and Personnel oddlot orders at closing prices Brokers to enter deals (mainboard cross, Oddlot cross, special block cross and two-firm oddlot) 5. Market Close 4:20 6. Print/Save Transactions 4:20-4:50 Trading Personnel 7. Generate Data for PCD and 4:20-4:30 PSE Settlement Banks 8. Send data to PCD/Settlement 4:30-4:50 PSE/PCD/Banks Banks 9. System Shutdown 4:50 PSE Test Date : April 24, 1999 (Saturday) Year 2000 date to be tested : February 29, 2000 PCD System Testing for settlement 7:00-12:00 PCD & Brokers' of trades entered on Backroom February 23, 2000 Personnel Test Activities The following describes the activities that must be done in the 4-day Y2K Street Wide Testing. Brokers are expected to do all the activities applicable to them. LexLib To ensure an active trading and matching of orders, brokers are expected to enter orders only on the following issues: MBT, TEL, MER, SMCB, ANS, AC, MPC, ALI, LC, & PA. Moreover, order prices and volumes entered should be realistic and reasonable . Brokers should perform the following trading functions: order entry, order edit, order cancel, deal entry, deal cancel, inquiry and end-of-day. 1. Order Entry/Edit & Cancel Create queuing of orders by entering at least five buying and selling orders at the current BBO prices respectively for any issues mentioned-above. Create an autocross by entering at least five buying and selling orders at the same prices for any issues mentioned-above. Create a match at market prices by entering at least five selling and buying orders at the BBO prices respectively for any issues mentioned-above. Enter at least five oddlot buying and selling orders for any issues mentioned-above. Edit buying and selling orders Cancel buying and selling orders 2. Entry & Cancel Enter a at mainboard cross deal Enter an oddlot cross deal Enter a special block deal Cancel a mainboard cross transaction Cancel a special block cross transaction 3. Inquiry Perform security inquiry on a particular security when needed (stock information) Perform order status inquiry when needed Perform deal status inquiry when needed Perform market information inquiry when needed (market indicator, most active, gainers/losers, graphs, and time & sales) Brokers should prepare a detailed testing procedure for the above activities using the sample test script provided. Further, for each of the test dates, member-brokers should use and accomplish the Test Checklist attached as Appendix B. cdlex Checking At the end of each testing, brokers should print/save their orders and trade reports which will be used for checking purposes. Member-brokers are also reminded that the settlement date of the December 24, 1999 transactions will be on January 3, 2000. Therefore, for printing the ABC Report, member-brokers should change the settlement date to January 3, 2000. Brokers may have different types of Back-Office Systems. In order to check these systems, the brokers should make their own checking procedures. As a general rule, brokers should conduct their testing in a production-like environment and should follow their actual daily operational procedure . However, brokers must ensure that they will be able to restore their production environment after each testing day. Therefore, a backup of the production environment is recommended before performing the test. IV. Test Results Feedback Upon completion of the Street Wide Testing member-brokers should report any unusual or erroneous results so that the PSE can assist in the appropriate remediation. Member-brokers should also fill up and submit the Street Wide Test Results Summary Form (Appendix A) and an accomplished Test Checklist (Appendix B) to the Philippine Stock Exchange within three days after each test date. Appendix A Philippine Stock Exchange, Inc. Y2K Street Wide Test Results Summary 1st Quarter 1999 INSTRUCTION Completely and honestly fill-out the Y2K Street Wide Testings BROKER INFORMATION Broker Name/Broker ID : ______________________________________ Name of Contact Person : ______________________________________ Position : ______________________________________ Contact Number : ______________________________________ Maktrade Test Results 1. Performed all test cases: Monday YES Monday NO 2. If answer to item 1 is "YES", Maktrade testing generated correct result: Monday YES Monday NO 3. If answer to item 1 is "NO", Please state reason below: ______________________________________________________________ ______________________________________________________________ 4. If answer to item 2 is "NO", please state problems below and attach Test Script used: ______________________________________________________________ ______________________________________________________________ CFE Test Results (for member-brokers with CFE only) 1. Performed all test cases: Monday YES Monday NO 2. If answer to item 1 is "YES", CFE testing generated correct result: Monday YES Monday NO 3. If answer to item 1 is "NO", Please state reason below: ______________________________________________________________ ______________________________________________________________ 4. If answer to item 2 is "NO", please state problems below and attach Test Script used: ______________________________________________________________ ______________________________________________________________ Back-Office System (for member-brokers with computer-based Back-Office System only) 1. Please supply the following information: Operating System : __________________________________________ Computer Platform : __________________________________________ System name and version : __________________________________________ 2. System environment used to perform the test [i.e., production, test, others (please specify)]: ____________________________________________________________ 3. System clock was tested: Monday YES Monday NO 4. If answer to item 3 is "YES", system clock testing generated correct result: Monday YES Monday NO 5. If answer to item 4 is "NO", please state problems below and attach Test Script used: Please check (/) the appropriate box below after performing the Y2K test in your Back-Office systems. Check the "YES" box if there is no discrepancy found in the reconciliation between your internal records and the reports of PSE and PCD; otherwise, check the "NO" box. If the document is not applicable to your firm, check the "N/A" box. Name of Document YES NO N/A 1. Initial Blotter Report 2. Invoice 3. Client's Receivable/Payable Aging Report 4. Contract Notes 5. Margin Reports 6. Statement of Accounts 7. Stock Reconciliation with PCD reports 8. Stock Records 9. Trade Reconciliation with Purchase/Sale Journals 10. Stock Inventory Report before January 3, 2000 11. Stock Inventory Report after January 3, 2000 12. Final Blotter Report Other documents not mentioned-above, please enumerate below: Name of Document YES NO Please attach the original printouts of the following documents: Initial and Final Blotter Reports generated by Back-Office system Daily Transaction Report generated by Maktrade and by CFE System (if applicable) (1) Invoice generated by Back-Office System (can be printed on photocopied preformatted form) Delivery Worksheet or its equivalent generated by Back-Office System Stock Inventory Report before and after January 3, 2000 generated by the Back-Office system and PCD cdlex We hereby certify that the above information is true and correct to the best of our knowledge and that the attached documents are original printouts. ____________________ ______________________ Chief Operating Officer President (Please sign over printed name) (Please sign over printed name) _____________________ ______________________ Date Date Memo to: PCD Participants Re: Y2K Street Wide Test Case for the PCD System Date: March 29, 1999 Y2K 'Street Wide' Test Cases for PCD System The test will be conducted using a copy of the production databases as of end of day of April 16, 1000. This means that authorized users of the PCD System as of April 16, 1999 will be able to access the PCD System using their current company and user passwords. The company's stock position as of end of day of April 16, 1999 will also be in effect during the street-wide test, meaning, it will be used for the settlement of the dummy PSE trades. If there are not enough holdings to settle the trades, you may perform dummy lodgments. There will be PCD staff who will handle the confirmation of lodgments. You will be able to access the PCD System from 7:00 am on April 17 and 24, 1999 from your offices using the usual LAN, dial-up or leased line connections. Just like in production, our SCCP batch settlement will be at 12:01 at which time all participants will be logged out from the system. The system will be online again from 1:01 pm to 3:00 pm for you to check the batch settlement process. We will be running our batch jobs from 3:01 pm-6:00 pm. You may also test the extract and report file download facility from 6:01 pm to 7:00 pm. LexLib Test Cases for APRIL 17, 1999 (Physical Date) JANUARY 3, 2000 (Logical Date) Test Case Responsibility Activity Preparation for the Brokers Participants to access PCD System on 03-Jan-2000 so that the 24- settlement of exchange Custodians De-1999 trades will complete. This will involve test of the ff. trades (securities delivery) Inst. Investors functions: with trade date of 24-Dec- EQLODGE, EOPFOLIO, EQTRDENQ, EQTRANSO, EQPFOLIO. 1999 and settlement date of 03-Jan-2000. PCD PCD to perform confirmation of portfolio lodgments. (EQBLOCONF). Preparation for the Due Clearing Due Clearing Brokers to enter DEPOWITH and CASHAUTH (if settlement of exchange brokers necessary). trades (funds delivery) with trade date of 24-Dec-1999 Settlement Banks Settlement Banks to confirm deposits using CONF. and settlement date of 03- Jan-2000 Transfers to/from Brokers Execute transfers and authorize transfers of portfolio holdings (if sub-accounts Custodians necessary) to and from subaccounts. This will involve the following Inst. Investors functions: EQTRANSF, EQTRFAUT, EQPFOLIO, EQTRANSQ Uplift of portfolio holdings Brokers Participants to enter uplift transactions, correction and deletion of Custodians uplifts. This will involve the following functions: Inst. Investors EQUPLIFT, EQCORUP, EQDELUP, EQTRANSQ, EQPFOLIO PCD PCD to perform confirmation of uplifts(EQBUPCONF). Entitlement of corporate PCD Entitle cash and stock dividends using EQENTITL. actions on record date; Cash dividend on AC 1 peso: 1 and Stock dividend on AL1 1:1 Processing of SCCP batch PCD Perform SCCP batch settlement. settlement at 12:01 pm. SCCP SCCP to check exchange trades using EQBTRDCOR and EQBTRDDEL functions. Settlement of exchange Brokers Participants to check on the status of their trades using trades after SCCP batch Custodians EQTRDENQ. settlement run. Inst. Investors Processing of nightly and PCD Perform nightly batch processing for 03-Jan-2000. daily batch runs Perform daily batch processing. Download to participants the extract and report files. Brokers Get the extract and report files (if necessary) and print PCD reports. Custodians Inst. Investors Test Cases for APRIL 24, 1999 (Physical Date) FEBRUARY 29, 2000 (Logical Date) Note: For this date, we will be using the databases as of end of day of April 17, 1999 (physical date); logical date is January 3, 2000 cdlex Preparation for settlement of Brokers Participants to access PCD Fintracs on 29-Feb-2000 so that the 23- exchange trades (securities Custodians Feb-2000 trades will complete. This will involve test of the ff. delivery) with trade date of Inst. Investors functions: 23-Feb-2000 and settlement EQLODGE, EQPFOLIO, EQTRDENQ, RQTRANSQ, EQPFOLIO. date of 29-Feb-2000 PCD PCD to perform confirmation of portfolio lodgments (EQBLOCONF) Preparation for Settlement Due Clearing Due Clearing Brokers to enter DEPOWITH and CASHAUTH (if of exchange trades (funds brokers necessary. delivery) with trade date of 23-Feb-2000 and settlement Settlement Banks Settlement Banks to confirm deposits using CONF. date of 29-Feb-2000. Non-exchange trade entry, Brokers Participants to enter non-exchange trades (trade date and authorization and settlement Custodians settlement date 29-Feb-2000) and perform Fintracs functions on same day Inst. Investors required to complete the non-exchange trades. This will involve the rest of the ff. functions: EQTRADE, EQBTRDAUT, EQTRDCOR. EQTRDSET, EQCONF, EQPFOLIO, EQTRDENQ, EQLODGE, EQTRANSQ PCD PCD to perform confirmation of portfolio lodgments (EQBLOCONF) Payment of cash dividend Brokers Check cash and stock dividends entitlements. This will involve the (AC 1 peso:1) and Custodians ff. functions: CASHQ, EQPFOLIO, EQTRANSQ. The report EQ distribution of stock Inst. Investors Confirmed Entitlements Report may be checked. Processing of SCCP batch PCD Perform SCCP batch settlement. settlement at 12:01 pm. SCCP SCCP to check exchange trades using EQBTRCOR and EQBTRDDEL functions. Settlement of exchange Brokers Participants to check on the status of their trades using trades after SCCP batch Custodians EQTRDENQ. settlement run. Inst. Investors Processing of nightly and PCD Perform nightly batch processing for 29-Feb-2000. Perform daily daily batch runs batch processing. Download to brokers, custodians and settlement banks the extract and report files. Brokers Get the extract and report files (if necessary) and print PCD reports. Custodians Inst. Investors For the second and third Y2K Streetwide test schedules, we will use the same set of test cases to be executed on different testing dates. Second Schedule July 3, 1999 (physical date) Jan. 3, 2000 (logical date) July 10, 1999 (physical date) Feb. 29, 2000 (logical date) Third Schedule Sept. 18, 1999 (physical date) Jan. 3, 2000 (logical date) Sept. 25, 1999 (physical date) Feb. 29, 2000 (logical date)