Year 2000 Testing with External Parties

Guideline No. 16.7

Year 2000 Testing with External Parties

Further to my letter of 30 September 1998 on testing for Year 2000 readiness, I enclose for your reference a copy of the summary report published by the Steering Committee on Year 2000 Compliance in the Financial Services Sector (the "Steering Committee") set up by the Secretary for Financial Services. The report summarises the Year 2000 external testing activities being organised or planned by the major shared financial systems in Hong Kong and will provide useful information to authorized institutions ("AIs") in conducting Year 2000 testing with external parties. This report will also serve to update the international community on the progress of the external testing work in respect of the Hong Kong financial services sector. The softcopy of the report can also be found at http://www.info.gov.hk/fsb/year2000.

It is intended that the report will be updated regularly in the future. The external testing activities of the major shared financial systems set out in the summary report are being reviewed and monitored by the Steering Committee, through the Subcommittees set up under it. Suitable user inputs are being provided to the service providers of the systems to ensure as far as possible that the Year 2000 external testing activities will appropriately address the requirements and concerns of the industry. The Steering Committee will review whether there are any material gaps or duplications in the testing activities and, if so, how such activities can be improved so that the external testing activities can be conducted in a more co-ordinated and cost effective manner. In this regard, if your institution has suggestions on the external testing activities of the major shared financial systems of the banking industry, please provide your input to the Banking Subcommittee currently chaired by the Secretary of the Hong Kong Association of Banks, comprising representatives from banks and the HKMA.

Despite the importance of external testing, international experience suggests that a sound internal testing programme remains the most effective way to ensure that an institution's Year 2000 preparations have been thorough and that significant problems will not develop internally. In general, an institution should proceed on external testing only if the relevant internal testing programme has been properly completed.

Should there be any questions on this subject, please contact our Mr Brian Lee at 2878-1651 or Miss Florence To at 2878-1197.