Don't use a Sequential stage to read the file, replace it with a Folder stage:
Folder -> XML Input -> Seq File
Small files can be read entirely by the Folder stage, however larger ones will need to only send in the filename and have the XML Input stage do the actual reading via the 'URL/File path' option.
xml input (error)
Post questions here relative to DataStage Server Edition for such areas as Server job design, DS Basic, Routines, Job Sequences, etc.
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