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CREATING A LOCALLY MANAGED SYSTEM TABLESPACE
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The Oracle 8i Concepts guide page. 3-8, states that you can specify that 
the system tablespace be created as locally managed by including the extent 
management local clause in your create database script......It states as 
follows:

"For the SYSTEM tablespace, you can specify EXTENT MANAGEMENT LOCAL in the 
CREATE DATABASE command"

The truth however, is that neither Oracle version 8.1.5 OR 8.1.6 supports 
the concept of a locally managed system tablespace.

In Oracle 8.1.5, any attempt to add the EXTENT MANAGEMENT LOCAL clause to 
your create database command will result in a syntax error OR an 
ORA-600 [3810] error.  In Oracle 8.1.6, any attempt to do so, results in 
no error....But the clause is ignored. In 8.1.7 an ORA-2165 is returned when 
using the clause in the create database command.

Locally managed system tablespaces are simply not yet possible.
Sam