From today's edition:

City slows amid bug paranoia By Suzy Jagger

Electronic Telegraph Y2K forum

THE City's traditional Christmas slowdown finally arrived yesterday as large financial institutions began to wind down ahead of the Millennium break.

Fund management giant Phillips and Drew contacted its clients last week urging them to limit dealings from this Monday. One dealer said: "It will be unbelievably difficult to deal with Phillips and Drew after this week. No one wants to be exposed to either stock market swings or the risk that your counterparty can't settle over the Millennium."

Insiders at Phillips and Drew insisted there was no official "ban" on dealing, but staff have been told to make sure that there are no outstanding bargains to be settled over the year-end. One dealer said: "Everyone is likely to be very choosy about whom they deal with up to then."

A spokesman for Peel Hunt, a City stockbroking firm, said: "We have severely restricted whom we deal with and what we deal in from here on in until the Millennium weekend is behind us. We are very cautious which is what you would expect any reasonable person to be. We want to protect the value of our company; there will be plenty of time next year to make money. It is just a safety first policy. Large firms will only be dealing with large firms until all this millennium stuff is over."

In the normal course of trading, dealers negotiate with their clients long settlement periods in return for an extra fee or a poorer price. The arrangement gives clients time to unwind their positions with many investment houses allowing customers to deliver stock which they have sold or deposit cash up to 25 days after a transaction is agreed. However, one market-maker said yesterday: "I won't let anyone who trades today settle after the Millennium; it isn't worth the risk."

Investment bank CS First Boston has adopted the same approach and will only deal if clients agree to settle the trade within the standard five-day period. Another market-maker said: "It is so ironic that all these banks have spent millions on their computer systems to make sure that they don't crash over the millennium, but they aren't going to let anyone use them."

-- Old Git (anon@spamproblems.com), December 17, 1999

Answers

Filed under: Things That Make You Go "Hmmmmm"...

"It is so ironic that all these banks have spent millions on their computer systems to make sure that they don't crash over the millennium, but they aren't going to let anyone use them."

Isn't it, now? But it's surely one of the best ways I know of to make sure that you're not processing anything incorrectly -- just don't process anything at all.

-- I'm Here, I'm There (I'm Everywhere@so.beware), December 17, 1999.