SEC Year 2000 Actions Regarding Securities Industry and Agency Systems
The Commission has been overseeing the year 2000 (Y2K) efforts of the self regulatory organizations (SROs) for several years. We have measured their progress at several different stages and commend the SROs for being resolute in their commitment to thoroughly prepare for the millennium date change.
In compliance with Commission disclosure rules, as of April 1999, 86% of broker-dealers and 70% of transfer agents reported on forms BD-Y2K and TA-Y2K that they had nearly completed implementation of the Y2K plan. These forms are available on the Commissionís website. With regard to industry testing, more than 97% of the almost 260,000 expected results from almost 400 firms were successfully achieved with only four actual Y2K errors. These errors were all quickly repaired.
Investment advisers and mutual funds also were required to report on their Y2K preparedness. As of June, approximately 80% of the advisers and 90% of the funds were either complete or nearly complete with their Y2K preparations for mission critical systems. Over 80% of advisers and funds reported that they have a Y2K contingency plan.
On July 27, 1999, the Commission adopted rules that require broker-dealers and non-bank transfer agents not completing their Y2K efforts by August 31 to cease doing business unless they have notified the SEC and filed a certification by their CEO that they would finish their Y2K efforts by November 15, 1999. As of September 3, seven broker-dealers and one non-bank transfer agent had filed these certifications indicating that they had not completed Y2K efforts. Firms not ready by November 15 must cease taking on new business and wind down operations by December 1. For any firm that refuses to cooperate, the Division of Enforcement will file an injunctive action in Federal District Court seeking a court order that the firm cease doing business.
The SEC is coordinating with the SROs, the Securities Industry Association, the Investment Company Institute and with other foreign and domestic regulators to ensure a smooth Y2K transition. In particular, we are working closely with the SIA, the ICI and the SROs on plans to ensure the smooth flow of information regarding the actual Y2K status of broker-dealers and mutual funds during the last week of 1999 and the first week of 2000.
The Commission, along with most major market participants and financial regulators, will establish information coordination centers in the last half of December 1999. In addition to monitoring market activity and events influencing the markets, these centers will also share Y2K related information. The SEC will keep the Presidentís Council Information Coordination Center fully informed of the status of the U.S. securities industry.
Regarding SEC systems, the Y2K issue is the Commissionís top information technology priority. The agency has met a target date of August 31 to have all systemsómission critical as well as non-mission criticalófully remediated, thoroughly tested, and completely Y2K compliant. This includes EDGAR, the system for submitting and disseminating filings, and EFFS, the system by which the Commission collects some $1.3 billion in annual fees.
A dedicated Y2K project team of skilled professionals have ensured that computer systems at SEC headquarters and regional and district offices are fully Y2K compliant. The scope of the teamís activities includes infrastructure platforms and devices, and the interfaces we use to provide information to, or obtain information from, external partners such as the Office of Management and Budget, Treasury and other self regulatory organizations. Staff from the Commissionís information technology office will be monitoring SEC mission critical systems to ensure that there are no unexpected upsets.