The Philippine Stock Exchange, Inc. (PSE) Year 2000 Readiness Disclosure Statement

The Philippine Stock Exchange, Inc. (PSE) is pleased to disclose its readiness to meet the challenges posed by the coming of the new millenium. The PSE assures all market participants of its commitment to ensure the reliability of its trading system and continued service to all its Member Brokers even beyond the year 2000. In addressing the Y2K Compliance issue, the Exchange has adopted the British Standards Institution's Definition of Year 2000 Conformity requirements, DISC PD2000, which generally stated means : Year 2000 conformity shall mean neither performance nor functionality is affected by dates prior to, during and after the year 2000. The Exchange Y2K-related activities started as early as fourth quarter 1997 when it issued as its circular the Securities and Exchange Commission (SEC) Memorandum Circular No. 7-A series of 1997 directing all securities companies to make appropriate preparation for the Y2K problem. In line with this, PSE immediately proceeded to make an inventory of business systems, hardware, software, network and telecommunication facilities, and assessed these systems' criticality, impact, and readiness. To further guarantee that all project objectives are met, the Y2K Committee was created and chaired by the PSE Chairman of the Board to ensure the prompt allocation of budgetary resources and that policies and directives are complied with by the Brokers. As part of the Exchange's Y2K readiness audit, hardware vendors were commissioned to perform a thorough health check on all mission critical trading computer servers and key systems. PSE services providers were likewise asked to evaluate the readiness of their respective systems and to provide the Exchange with Year 2000 Readiness Certifications to indicate their systems/hardwares' compliance to industry Y2K standards. To remedy non-compliant systems, the Exchange installed upgraded versions of software, decommissioned and replaced some equipment with newer models, and/or fixed other computer systems and software. After the Exchange's Automated Trading Group (ATG) assessment of its trading system application software in April 1998, program codes of both the Automated Order Matching trading engine and related application programs running on the client PC terminals were rewritten in accordance with the DISC PD2000 rules. The PSE adopted the expanded date format mm/dd/yyyy in all its broadcasts, storage and displays of date information. Extensive and thorough internal testing were done to check the validity of program processing for all the identified critical dates before, during and beyond the year 2000. The Y2K compliant version of the trading system software was put into production on August 3, 1998, simultaneous with the upgrade of all client PC terminals with the conversion from Windows 3.11 to Windows 95 and installation of Y2K patches. Likewise, the PSE has also examined its internal office systems and building infrastructure to ensure that the Exchange can continue its internal operations free from the Y2K problem. As part of the validation process, the PSE conducted a series of integration or "street-wide testing" (SWT) with all its member-brokers, the PCD, the settlement banks, the custodian banks and the data vendors. The objective of these SWT's is to check whether the trading-related systems of market participants (PSE, depository, member-brokers, settlement banks, data vendors) and the interfacing between these systems are all Year 2000 ready. To date, the Exchange has conducted three (3) sets of the SWT each consisting of 4 days of mock trading and 2 settlement days. The successful completion of the 3 street-wide tests confirmed that the PSE Maktrade System is Y2K-ready.