Financial Markets Industry
Good event last night from PRMIA London and GFT on FRTB. Seems like lots to be done with the biggest changes to market risk regulation since the advent of VaR. There are some tweets from the evening covering the Internal Model Approach (IMA), Standardised Approach (SA) and PnL attribution if you click here or paste https://twitter.com/search?q=%40TheLongSentance%20%23frtb&src=typd into your browser.
Posted by Brian Sentance | 28 April 2016 | 7:55 am
Following the lead from my friend Josh Feldmuth with his “Thursday Thought” posts on LinkedIn, I thought I would take a break from the world of Enterprise Data Management and financial markets to put down a few musings on people and management at work. I hope that 20 years of managing a software company has taught me a few things, however much I still have to learn.
Anyway, on with my first attempt, the importance of publicizing the work you do to your colleagues. For all you hard working folks out there who think working hard and delivering is enough, a.k.a. “Why do I need to tell anyone what I am doing? Isn’t it obvious?” then please bear with me below because no it is not obvious. Excellence and hard work needs a little more “self-publication” than maybe you are currently comfortable with. A bit more marketing of your own work internally can really maximize what you can do for the business, and on a more individual note, what you can do for your own career.
I am lucky enough to have some great people to work with, people who are real characters, fantastic at what they do and very hard working. But working hard and being great at what you do isn’t enough. Or rather there are ways to deliver more value for you, your colleagues and the business as a whole without the necessity for a great deal more effort on your part. Simply providing small (really small!) incremental updates out on what you doing as you progress through your day can be enormously beneficial.
- Building trust - humans are fickle creatures. In the absence of information, in general people assume the worst, despite how good-natured the vast majority of your colleagues are. So don’t allow that to happen, let people know what you are doing, build trust and reduce the need for anyone to interrupt you to ask “Where are you on this?”
- Sharing knowledge – from large to small organizations, enabling other people to know what you are up to, even (and maybe especially) others that are not directly involved in your project/activity can have lots of benefits such as reduced effort duplication, creating new ideas and building up a corporate body of knowledge of “how did we deal with this problem last time?”.
- Feeling part of something – a less obvious/less direct benefit but an important one. Publicizing what everyone is up to can build up a great sense of context and direction for the work of individuals, teams and the business as a whole. Let’s put that man on the moon. Together.
So whilst for many people more self-publication can be a little unnerving at first, the benefits are demonstrable and significant in my view. Work is not all about you, how hard you work and how good you are at delivering. It’s also about enabling others to easily find out what you are doing. So try it. Push the information out. Let’s see what everyone else can do with it. You will be surprised.
Posted by Brian Sentance | 25 January 2016 | 1:41 pm
I attended a great event by DataArt yesterday evening at Armourers Hall in London - some of the main points from the panel can be found on Twitter via #DataArtFRT
Posted by Brian Sentance | 5 November 2015 | 8:43 am
Very pleased to say that Xenomorph has been shortlisted in multiple categories of the 2015 Data Management Review Awards:
- Best Sell Side Enterprise Data Management Platform
- Best Buy Side Enterprise Data Management Platform
- Best Data Management Platform for Portfolio Pricing and Valuations
- Best Data Management Platform for Security Master
- Best Risk Data Aggregation Platform
- Best Analytics Platform
Now in their third year the A-Team Group's awards are designed to acknowledge excellence in data management within Capital Markets.
If you have a moment then simply click here and register your vote by Wednesday 14th October 2015.
Brian and the Xenomorph team.
Posted by Brian Sentance | 5 October 2015 | 2:57 pm
Hi folks, there is a recording up of a webinar I took part in yesterday with the A-Team. The webinar was called Enterprise Data Management - The Next Generation and involved discussion about what's needed and what's next in EDM. You can get access to it via this link.
Posted by Brian Sentance | 30 April 2015 | 7:01 pm
Xenomorph is honored to announce today that is a recipient of the FTF Gold Standard Award with a 2nd place finish for TimeScape EDM in the category of ‘Best Enterprise Data Management Solution’ in the FTF News’ 2015 Technology Innovation Awards. While we feel our Timescape EDM solution is unrivaled by our peer competitors, we congratulate all the participants and remain committed to providing the best data management solutions on the market, helping our investment banking and asset management clients to reduce data costs, improve data quality, and to build a long-term foundation for regulatory reporting and making better business decisions.
Presented by Financial Technologies Forum and FTF News, the Technology Innovation Awards recognize information technology firms and service providers in the financial sector as well as industry professionals that have made significant strides and noteworthy achievements in operational excellence during 2014. The ‘Best Enterprise Data Management’ category recognizes the providers that have successfully applied effective data management capabilities via new or updated offerings for middle- and back-office operations and facilitate advances in straight through processing (STP).
At Xenomorph we believe that successful business requires data that is fit for purpose and easy for all to analyze. This guiding principle has led us to develop software solutions for financial markets that enable both technologists and business users alike to manage, cleanse and analyze more data, more quickly. As such, we are proud to continually be on the forefront of enterprise data management innovation with our TimeScape EDM solution, and our cloud-based data publishing service, TimeScape MarketPlace. In 2014 we focused on adding browser-based data cleansing, validation workflow and full audit capabilities to TimeScape in order to bring TimeScape EDM to market. Now with existing and new clients already benefitting from using TimeScape EDM for regulatory compliance, we believe that TimeScape EDM is unrivalled in enabling our clients to support any kind of data requirement, any type of asset class and to fully integrate analytics as part of an auditable data management process.
As we look ahead through 2015, our goal is to continue to reimagine how firms can more easily manage, analyze and monetize data seamlessly. We want our clients to spend less time manually validating data and more time understanding the data, in order to accelerate regulatory compliance, streamline their operations, and bring innovations of their own to the marketplace.
And finally, a huge thank you to all of you who voted for us!
Posted by Brian Sentance | 21 April 2015 | 6:08 pm
I went along to a GARP event on Monday night, held at the Harmonie Club in NYC. The event was introduced by Stefan Magnusson, chapter co-director of GARP and MD Market Risk Americas at Rabobank. Jeremy Josse was the main speaker, doing a talk entitled "Value, Financial Innovation and Regulation" loosely based around his book "Dinosaur Derivatives and Other Trades".
Jeremy started by a quick introduction to himself, describing how he has worked for many financial institutions during his career, but his educational background also included philosophy and economics too. He suggested that much of risk management was about the math and the technical aspects of risk management, whereas he was going to focus more on meaning rather than the underlying detail. Like many an Englishman (!) he almost seemed apologetic for suggesting this but to bare with him as he pulled various strands of thought together.
Starting with Dinosaur Derivatives, Jeremy wondered whether there could be value today in a derivatives contract or option to buy a Megalodon. Given that a Megalodon is an extinct species of giant shark, you would think not given that physical delivery might be a problem. That said, Jeremy thinks there could be a market in such an option due to:
- Brokers - generating demand
- Control of supply
- Liquidity - some illiquid assets trade at a 30% premium to illiquid ones
- Arbitrage - based on some expectation of selling at a higher price
Jeremy then listed off some other assets and considered their value:
- Gold - no utility in this asset glass, reputed as a "safe-haven" asset
- Diamonds - again no fundamental utility
- $ - a fiat currency built on "trust" with no underlying asset, with fiat currencies being used first in China around 1000 years ago
- Contracts for Difference - again no intrinsic value to this asset class
- Internet/Social Media stocks - Jeremy thinks we are in internet bubble 2.0 with group think leading valuations astray
Looking at the Theory of Valuation then the comparison of market value versus intrinsic value is really analogous to technical analysis (charting/trending) versus fundamental analysis (balance sheet etc). Jeremy mentioned the Efficient Market Hypothesis (EMH) and said that anyone that has worked in the markets knows that EMH is not adhered to in the real world i.e. assets do not always reflect all information known about them. In particular Jeremy sees the work of Scheleifer and Shiller in behavioral finance as one of the most interesting areas of financial theory to work in, with the potential to quantify "irrationality". Jeremy put forward the following three choices that an individual could choose in terms of what money they would receive and what money another individual might receive:
- $100 (me) and $0 (you) - some choose this but not all; we are not all greedy
- $80 (me) and $80 (you) - most choose this but not all; we are not profit maximizers
- $0 (me) and $150 (you) - a few choose this but not all; we are not all generous
Moving on to the Credit Crisis, Jeremy said that this was caused due to the mispricing of assets such as CDOs/CLOs and CDS. This mispricing was caused by complexity and a lack of transparency but such characteristics are fundamental to the nature of financial innovation. As an aside, Jeremy mentioned that smaller regional banks tend to trade at higher multiples than say universal banks due to investor perceptions of greater transparency of what is going on and what the risks are.
So moving on to Financial Innovation, Jeremy asked firstly what a financial instrument is?:
- Rights - to future cashflows etc
- Contractual strings/permutations - choice but leading to complexity
- Epicycles upon epicycles - derivatives but more general dependencies and links
- Some form of legal fiction - to arbitrage regulation and prohibitions
Jeremy talking around prohibition (aka modern regulation) being a driver of innovation, starting in history with the prohibition of usury leading financial innovation to find ways of replicating the returns of interest payments but without there being interest payments, so maybe leasing or buying goods receivable at discounts. Looking at the timeline of financial products through history:
- Loans - available in Babylonian times
- Stocks - available in Roman times
- Convertibles - developed as a form of finance for the creation of the US railroads in the 19th C
- Derivatives - back to Babylon again with property options
- Securitizations - late '90s
- CDS - late '90s
Considering the Logic of Financial Innovation, Jeremy said that most professional disciplines used either Empirical Testing or Deductive Inference to innovate and check that something "worked" as such. But really there is no "social laboratory" for financial innovation or indeed for the regulation intended to control/shape it, so most things, including additionally macro economic policy, were implemented without prior testing. Jeremy said that financial innovation is both critical to our economies but also very vulnerable due to this lack of testing.
Back to the Credit Crisis, Jeremy said that 10 years running up to the crisis were the social laboratory for CDO/CLO/CDS products but these were mispriced due to a lack of testing. This was a major cause of the crisis but such innovation (and lack of testing) is fundamental to the nature of financial innovation itself. Coming forward to today, securitization is now better understood, biases by rating agencies have been controlled and counterparty risk is being reduced through clearing. So put another way, financial innovation has a stormy creative period where a new product morphs and evolves and pushes the limits of what people, corporations and governments find attract or acceptable, until these limits are pushed too far and a crisis ensues - then finally maturity comes with experience and better understanding of the risks.
Jeremy is a collector of Antique Maps, which he says have become an interesting asset class and listed their history:
- 1970s - emerged as a new asset class
- Asset subject to wild price movements/patterns of behavior
- Now an established art form
Initially dealers would visit libraries containing maps (notably Harvard in the US) and simply rip out pages from it. The market had misrepresentations of authenticity (lying), theft, short-selling, insider trading and many other dubious practices. This initial period of innovation was very destructive without regulation, but now antique maps are an established art form and asset class. So there is a real dichotomy between this destruction that eventually led to people seeing ancient maps as things of beauty, collecting them and hanging them on their wall.
So why are Regulations needed? Jeremy said that regulation was needed to control:
- Dysfunctional patterns of behavior
- Extreme value fluctuations - primarily due to greed
- Wealth distribution - implementing social justice
- Financial innovation
But what is the Right Kind of Regulation? Jeremy said that we should not hand over "The rule of law to the rule of lawyers". He said there had been 100 years of regulation, with a lot of focus (particularly in the US) on rules that micro-manager what institutions can and cannot do, built up on closing the door after each fraud/incident. Here he talked of Dodd-Frank with all of its detail but particularly gave time to say he thought that the "Living Wills' regulation was a work of fiction and of little practical use - he quoted Hemingway who said that "You go bankrupt slowly then quickly".
Jeremy believes that Principles-Based Regulation is a better solution - although I would say that this proved no better looking at the UK vs US regulation through the crisis? He advocates taking politicians out of the rule making, with judges making decisions based upon case law as it builds up over history. The issue of enforcement seems to loom large here, even if principles could work, they will not work with enforcement. Jeremy pulled up a diagram showing arrows between Value, Financial Innovation and Regulation showing how intertwined they were. He suggested that "vexatious" litigation (the contract must cover every eventuality) was a problem in US regulation in particular. More fundamentally, creating regulation prior to knowing its effects was extremely difficult, since society and economies are not bounded games, unlike chess say where a computer can evaluate all possibilities.
There were some audience questions, firstly on the viability of bitcoin which Jeremy was negative on, saying that without trust, value can disappear and that "our" electronic money only works because it is backed by governments. Another question talked about the SIFIs and Jeremy said he favored breaking them up over more regulation to control them.
In summary, Jeremy was a great speaker with some good ideas. As he said, most were common sense but I guess his main point was that financial innovation would not happen if it is regulated too quickly/too harshly. So new financial innovation can be destructive and painful, but regulation itself can stifle innovation and the creation of value and new markets.
Posted by Brian Sentance | 2 April 2015 | 8:59 pm
A few recent news articles out from yours truly.
First off, one about the Chief Data Officer in Money Management Executive magazine.
Second, one about Data trends of EDM in the Wall Street Letter.
Thirdly something on data quality and the CFTC getting more aggressive on Markets Media.
And as if you didn't know, today is the last day to vote for Xenomorph in the FTFNews Technology Innovation Awards, so please (pretty please!) take a minute to vote for Xenomorph. You know it makes sense (and big thank you! if you do have time...)
Vote by clicking here.
Posted by Brian Sentance | 25 March 2015 | 6:04 pm
Posted by Brian Sentance | 19 March 2015 | 4:31 pm
Pleased to say that Xenomorph has been nominated in the FTF News Technology Innovation Awards 2015 in the Best Enterprise Data Management Solution category.
Great to see some recognition for the hard work the development team have put in recently in improving our clients' efficiency through extending our workflow, cleansing and validation functionality, enabling our clients to have easier access to reports and visualizations through our new APIs and connections to business intelligence solutions, and offering our clients greater deployment flexibility with TimeScape EDM now available on the Microsoft Azure Cloud.
Your vote would be very much appreciated and you can get to the voting page directly here.
Brian and the Xenomorph team.
Posted by Brian Sentance | 13 March 2015 | 11:21 am
Quick plug for an interview I did recently with Paul Rowady on the Tabb Forum, you can get access to the video here and a brief summary of what we talked about is below. As ever, Paul has his humourous angle on things and this time my green socks got the "Umpa Lumpa" treatment (unfortunately you have to watch to the end to catch that one!). Last time it was my likeness to the lead singer of an Australian band. And for the record, we did also have a good conversion on data management and BI/visualization.
"As firms increasingly apply analytics to massive volumes of raw data, the amount of derived data is growing exponentially, and the need to apply strict governance to this derived data is more important than ever. To satisfy regulatory demands, the full data trail – including models and calculations – needs to be auditable, remarks Brian Sentance, CEO, Xenomorph. Unfortunately, there often is a disconnect between the validation of the raw data and the governance of the middle tier of derived data or analytics, he notes. Sentance and TABB Group’s Paul Rowady, principal and director of data and analytics research, examine the breakdown of data governance best practices, the risks involved, and the role of visualization tools in identifying data quality and data management shortfalls."
Posted by Brian Sentance | 10 March 2015 | 3:16 pm
PRMIA and Bloomberg held a joint event at Bloomberg HQ yesterday evening entitled "How low can yields go?". Tom Keene of Bloomberg News proved himself to be a very dry, amusing and competent moderator and the panel he moderated was comprised of Harley S. Bassman of PIMCO (number of humourous jibes at Harley for having caused the financial crisis due to his involved in credit derivatives), James Sweeney, Chief Economist at CS and Henson Orser of Nomura.
Tom asked the panel the obvious question "How low can yields go?". One response from the panel was that almost every market event was clouded in "deflation hysteria" looking at events such as the recent drop in oil prices. Things will change when this hysteria weakens. Another point made was that current policies (QE) are making safe assets unattractive to release cash into the economy, but that negative interest rates are inherently destabilizing. There was an attitude put forward of "we will survive this" and looking back at the Great Depression then folks pulled money from banks whereas that did not happen in 2008/9. There was some talk of how shorting the bond market 14 months in row has been wrong, but that with 3 1/4% out at 10 years along the US yield curve that this shorting has had no effect on macro policy.
Tom asked whether time "theta" as he put it, was the real healer here. The panel responded that the government's policies of 2009 worked, regardless of your opinion of where the same policies might be taking us long term. A period of balance sheet repair has followed during the 7 years after the crisis and that this was "mostly repaired" looking at many measures of debt. Looking forward, the yield curve is priced for a rate hike and the Fed wants one, but this will not occur until we are nearer full employment at 5-6% and not 8-9% levels. Wage inflation is likely to take off nearer full employment, and growth will start to slow at the same time. There are signs that this is already occurring, and that core inflation in the US is not really that low, only say 30bp less than average.
The panel also discussed the issue that many working on Wall Street had not experienced a tightening economy over the past 10 years so maybe there should be some concerns over how they deal with it through this transition. The panel envisage more FX and rate volatility as this occurs. Against this background, then due to regulation Wall Street had fewer and smaller players to help provide liquidity into this volatile market to come. One of the panelists pointed out issues for equities, with cash flows being discounted at the current (very low) curve whilst returns look weak. One potential scenario build out of this put forward for a rapid increase in inflation over 3-6 months.
Tom asked "How long is history" wanting to establish what timeframe we should be assessing the success of policy. One of the panelists said that baby boomer generation retiring may affect fund flows as they get out of equities and buy bonds and that rates behaviours may have changed for good with markets used to yield curve inversions at around 5/5 1/4% but now moving to 3/3 1/4%. Another panelist mentioned that due to regulation the flow of funds from mortgages and their securitization to sophisticated investors was broken. Again the issue of Wall Street having less capacity due to regulation was mentioned.
On the subject of FX, the panel thought it a very difficult market to forecast. Dollar strength looks set to continue with the possibility of a 85c EUR. The Eurozone may strengthen economically as exports benefit from a weak EUR. Tom asked where investors could capture yield, and Brazil was suggested as a good target given its high rates currently. One of the panelists suggested that the world was taking part in a co-ordinated currency war, but this was not accepted by all. Japan 2015 GDP growth is likely to be good, supported by lower oil prices and experiencing some wage inflation. The Japanese Government cannot buy any more JGBs since the supply is running out, however they think inflation is about to take off there. In summary they thought Abenomics had "worked".
"Stability" and how to recognize it was the next topic from Tom. Firstly the panel thought that whatever is to come in the transition to stability, the world would not unravel. The panel said that stability ex-post was much easier to recognize than ex-ante. One of the panelist put forward a potential scenario in which the Fed could not tighten rates with a very strong dollar, China doing worse/US doing better and therefore everyone wants treasuries.
Audience Q&A - There were a few audience questions. The first was on demographics - asking the panel about the effects on rates and the economy of birth and retirement rates. The panel thought a key issue was whether the cohort of retirees was being replaced by a similar cohort of workers. The US is balanced in this regard but other countries such as Germany, Italy and Japan are not. In the 1980's, Japan did very well economically and had 13 retirees per 100 workers and now this was 48 per 100. However, even for the US then increased longevity of the retiring population was another key issue to address.
Another audience question focused on QE/fiat currencies and whether today's governments where printing more money than the economy has been growing. In summary the panel seemed to think of QE as an experiment that had not gone wrong yet, not to say that it might not and not to say how long it might take to go wrong.
One audience member wondered whether Francis Fukayama's "End of History" now applied to the fixed income and hedge fund industries. The response from the panel was that it is never "different this time" and that greed/ego/hubris had caused problems and would cause problems again. However Wall Street is not dead, and it has the plumbing and machinery to convert granny's savings into funding for an app developer. The last piece of advice from one panel member was to go to the bar and think pleasant thoughts.
So we did.
Posted by Brian Sentance | 5 March 2015 | 9:22 pm
PRMIA put on their Risk Year in Review event at the New York Life Insurance Company on Thursday. Some of the main points from the panel, starting with trade:
- The world continues to polarize between "open" and "closed" societies with associated attitudes towards trade and international exposure.
- US growth at around 3% is better than the rest of the world but this progress is not seen/benefitting a lot of the poplation yet.
- This against an economic background of Japan, Europe and China all struggling to maintain "healthy" growth (if at all).
- Looking back at the financial crisis of 2008/9 it was the WTO rules that were in place that kept markets open and prevented isolationist and closed policies from really taking hold - although such populist inward-looking policies are still are major issue and risk for the global economy today.
- Some optimistic examples of progress howver on world trade recently:
- $1T of trade covered by US-China agreement over non-tariff technology items
- $1T of benefit from a US-India agreement over food stock-piling
- US-China agreement over climate change
- US Government is divided and needs to get back to pragmatic decision making
- The Federval Reserve currently believes that external factors/the rest of the world are not major risks to growth in the US economy.
James Church of sponsor FINCAD then did a brief presentation on their recent experience and a recent survey of their clients in the area valuation and risk management in financial markets:
- Risk management is now considered as a source of competitive advantage by many insitutions
- 63% of survey respondents are currently involved in replacing risk systems
- James gave the example of Alex Lurye saying risk is a differentiator
- Aggregate view of risk is still difficult due to siloed systems (hello BCBS239)
- Risk aggregation also needs consistency of modelling assumptions, data and analytics all together if you are avoid adding apples and pears
- Institutions now need more flexibility in building curves post-crisis with OIS/Libor discounting (see FINCAD white paper)
- 70% of survey respondents are involved in changes to curve basis
- Many new calculations to be considered in collateralization given the move to central clearing
- 62% of survey respondents are investing in better risk management process, so not just technology but people and process aswell
James was followed by a discussion on market/risk events this year:
- Predictions are hard but 50 years ago Isaac Asimov made 10 predictions for 2014 and 8 of which have come true
- Bonds and the Dollar are still up but yields are low - this is as a result of relatively poor performance of other currencies and the inward strength of US economy. US is firmly post-crisis economically and markets are anticipating both oil independence and future interest rate movements.
- Employment level movements are no longer a predictor of interest rate moves, now more balance of payments
- October 15th 40bp movement in yields in 3 hours (7 standard deviation move) - this was more positioning/liquidity risk in the absence of news - and an illustration of how regulation has moved power from banks to hedge funds
- Risk On/Off - trading correlation is very difficult - oil price goes means demand up but 30% diver in price over the past 6 months - the correlation has changed
- On the movie Interstellar, on one planet an astronaut sees a huge mountain but another sees it is a wave larger than anything seen before - all depends on forming your own view of the same information as to what you perceive or understand as risk
Some points of macro economics:
- Modest slow down this quarter
- Unemployment to drop to 5.2% in 2015 from 5.8%
- CS see the Fed hiking rates in mid-2015 followed by 3 further hikes
- The market does not yet agree, seeing a move in Q3 2015
- Downside risks are inflation, slow US growth and wages growth anaemic
- Upside risks - oil price boost to spending reducing cost of gas from 3.2% down to 2.4% of disposable income
Time for some audience questions/discussions:
- One audience member asked the panel for thoughts on the high price of US Treasuries
- Quantitative Easing (QE) was (understandably) targetted as having distorting effects
- Treasury yields have been a proxy for the risk free rate in the past, but the volatility in this rate due to QE has a profound effect on equity valuations
- Replacing maturing bonds with lower yielding instruments is painful
- The Fed are concerned to not appear to loose control of interest rates, nor wants to kill the fixed income markets so rate rises will be slow.
- One of the panelists said that all this had a human dimension not just markets, citing effectively non-existing interest rate levels but with -ve equity still in Florida, no incentive to save so money heads into stock which is risky, low IR of little benefit to senior citizens etc.
- Taper talk last year saw massive sell off of emerging market currencies - one problem in assessing this is to define which economies are emerging markets - but key is that current account deficits/surpluses matter - which the US escapes as the world's reserve currency but emergining markets do not.
- Emergining market boom of the past was really a commodities boom, and the US still leads the world's economies and current challenges may expose the limits of authoritarian capitalism
The discussion moved onto central clearing/collateral:
- Interest rate assets for collateral purposes are currently expensive
- Regulation may exacerbate volatility with unintended consequencies
- $4.5T of collateral set aside currently set to rise to $12-13T
- Risk is that other sovereign nations will target the production of AAA securities for collateral use that are not AAA
- Banks will not be the place for risk, the shadow banking system will
- Futures markets may be under collateralized and a source of future risk
One audience member was interested in downside risks for the US and couldn't understand why anyone was pessimistic given the stock market performance and other measures. The panel put forward the following as possible reasons behind a potential slow down:
- Income inequality meaning benefits are not throughout the economy
- Corporations making more and more money but not proportionate increase in jobs
- Wages are flat and senior citizens are struggling
- (The financial district is not representative of the rest of the economy in the US however surprising that may be to folks in Manhattan)
- The rest of the US does not have jobs that make them think the future is going to get better
- Banks have badly underperformed the S&P
- Regulation is a burden on the US economy that is holding US growth back
- Republicans and Democrats need to co-operate much more
- House prices need more oversight
- Currently $1.2T in student loands and students are not expecting to earn more than their parents
- Top 10 oil producers are all pumping full out
- The Saudis are refusing to cut production
- Venezuela funding policies from oil
- Russia desparately generating dollars from oil
- Will the US oil bonanza break OPEC - will they be able to co-ordinate effectively given their conflicting interests
Summary - overall good event with a fair amount of economics to sum up the risks for 2014 and on into 2015. Food and wine tolerably good afterwards too!
Posted by Brian Sentance | 23 November 2014 | 9:38 pm
The A-Team put on another good event at DMS New York yesterday. Lots of good stuff talked and here are a few takeaways that I remember, after a photo of Ludwig D'Angelo of JPMorgan:
- Data Utilities - One of presenters said that "Data Utility" was a really overused term second only to "Big Data". My comment would be that a lot of the managed services folks seem to want to talk about "Data Utilities" - seeming to prefer that term rather than what they are? Maybe because they perceive as better marketing and/or maybe because they hope to be annointed/appointed (how I don't know) as an industry "Data Utility". Anyway for me they fail to address the issue of client-specific data and its management very well, much to the detriment of their argument imho - although SmartStream did say that client data can be mixed up into the data services they offer.
- Andrew Gets Literaturally Physical - Andrew Delaney of the A-Team expressed a preference for "physical" books when talking about why the A-Team also prints the Regulatory Data Handbook2 as well as making it available online. I have to agree that holding a book still beats my Kindle experience but maybe I am just getting old. Andrew should check out this YouTube video on how the book was first introduced...
- FIBO - The Financial Instrument Business Ontology (FIBO) was discussed in the context of trying to establish industry standards for data. As ever the usage of words like "Ontology" I suspect leaves a lot of business folks looking for the nearest double shot of expresso but that aside, seems like the EDM Council are making some progress on developing this standard. Main point from the event was industry adoption is key. I found some of the comments during the day a bit schizophrenic, in that some said that the regulators should not mandate standards (i.e. leave it to industry adoption and principles) but then in the next breath discussing the benefits (or otherwise) of the LEI (ok, not mandated but specific and coming from the regulators). Certainly the industry needs "help" (is that a strong enough word?) to get standards in place.
- Data Quality - Lots on data quality with assessing the business value of data quality initiatives being a key point. On the same subject, Predrag of element-22 announced that the EDM Council will soon be announcing adoption of the Data Quality Index, which could be used to correlate data quality with operational KPIs for the business.
- Regulation (doh!) - It wouldn't be a data management event without lots of discussion on regulation - a key point being that even those regulations that are not directly/explicitly about data still imply that data management is key (take CVA calcs for example) - and on a related note it was suggested that BCBS239 should be considered as a more general data managment template for any business objective.
- Entity Hierarchies/LEI - Ludwig D'Angelo of JPMorgan gave a great talk and said that vendors were missing a massive opportunity in delivering good hierarchy datasets to clients, and that the effort expended on this at firms was enormous. Ludwig said that the lack of hierarchies in the Legal Entity Identifier (LEI) is a gap that the private sector could and should fill. Ludwig also seemed initially to be thrown when one of the audience suggested that they were multiple "golden copies" of hierarchies needed, since definitions of ownership can differ depending on which department you are in (old battle of risk and finance departments again). Good discussion later of how regulation was driving all systems to be much more entity-centric rather than portfolio-centric, emphasising the importance of getting entity hierarchies right.
- DCAM - John Bottega did a great presentation on the Data Management Capability Model (DCAM). John asked Predrag of element-22 to speak about DCAM and he said that unlike previous models (DMM) then this framework would not only assess where you are in data management but will also show you where you need to go. DCAM covers data management strategy / operations / quality / business case / data architecture / tech architecture / governance / program. From what I could see it looked like a great framework - it appeared like common sense and obvious but that is in itself difficult to achieve so good effort I think. Element-22 will offer an online service around DCAM that will also allow anonymous benchmarking of data management capabilities as more institutions get involved (update: the service is called pellustro).
- BCBS239 - Big thanks to John M. Fleming of BNY Mellon and Srikant Ganesan of Risk Focus for taking part in the panel with me. Less focus on spreadsheet use and abuse on this panel unlike the London Panel from last month. John had some very practical ideas such as the use of Wikis to publish/gather data dictionary information and with a large legacy infrastructure you are better documenting differences in definitions across systems rather than trying to change the world from day one. Echoing some of the points from DMS London, it was thought that making the use of internal data standards as part of a project sign off was very pragmatic data governance, but that also some systems should be marked/assessed as obsolete/declining and hence blocked from any additional usage in new project work. Bit of a plug for some of our recent work on data validation and exception management, but the panel said that BCBS239 needs to encompass audit/lineage on calculations/derived data/rules in addition to just the raw data
Posted by Brian Sentance | 6 November 2014 | 12:44 am
Great event by Capco and Zicklin Business School at Baruch College in NYC yesterday. Topics went right through from high frequency trading, systemic risk, wealth management and bitcoin. The agenda is here and you can see some on the highlights on twitter at #BankingReloaded.
Posted by Brian Sentance | 29 October 2014 | 7:42 pm
A great afternoon event put on by TabbFORUM in New York yesterday with a number of panels and one on one interviews (see agenda). You can see some of went on at the event via the hashtag #TabbTech or via the @XenomorphNews feed.
"Death of Legacy" Panel Discussion
Posted by Brian Sentance | 16 October 2014 | 10:50 pm
Good day at the A-Team's DMS London event last Wednesday. The day started with Tom Dalglish doing a pretty passable impression of a stand-up comedian in the morning keynote to open the day - not exactly an easy thing to do if 1) you are asked to do it very much at the last minute and 2) this is data management, not the subject that most comedians would immediately reach out for. So due kudos to Tom, and some of the comments he made about technology architects and technology builders were funny and resonated with the audience, such as this quote coming from a technologist: "How can I give you the requirements, I haven't finished the code yet?" (I think we have all been there on that one a few times in our careers...).
You can find some of the main points from the various panels at via @XenomorphNews or more generally by #dmslondon (you could also find out a bit via my twitter account @TheLongSentance so long as you don't mind the odd photograph and a few bits of personal baggage now and again).
BCBS239 Panel - I took part in the panel on BCBS239 on risk data aggregation and reporting, something which I have written about before, and obviously a prime example of how regulation is influencing (dictating?) financial markets institutions to take data management seriously. Dennis Slattery of EDMWorks moderated the panel, and on the panel with me was Sally Hinds of DCMS, and Mikael Soboen, head of risk systems at BNP Paribas.
BCBS239 Panel at DMS London
Dennis started by outlining the four pillars of BCBS239:
- Pillar 1 “Overarching Governance and Infrastructure.”
- Pillar 2 “Risk aggregation” capabilities.
- Pillar 3 “Risk reporting” capabilities.
- Pillar 4 “Supervisory review, tools and cooperation."
Regulatory Chicken - Dennis started by asking the panel whether BCBS was another game of regulatory "chicken" where the approach of "principles" means 1) the banks do the minimum and wait for the banks to inspect and tell them what they specifically have to do 2) the regulators don't really want to be more specific beyond principles because they themselves are unsure of what is needed and want to learn from what different banks have done. General concensus from the panel debate was that firms were not doing as much as they could, but that banks needed to show at least that they had a program in place and running by the January 2016 deadline or face big issues with the regulators (so the game of regulatory chicken is "on" seems to be the conclusion). Mikael Soboen added that he was unsure whether his regulator would have the time to conduct the BCBS239 given the workload that the regulators currently faced.
The End of Spreadsheets? - Dennis asked whether BCBS239 and the requirements for having a clear data lineage meant this sounded the bell for the end of spreadsheet usage at banks. I said not - I personally feel that a lot of folks in technology underestimate how difficult using software is for many business users and tools that make manipulating data easy like spreadsheets will have a role for the foreseeable future. I suggested that spreadsheets are a great adhoc reporting and analysis tool, and things mainly go wrong when they are used as a personal, "siloed" desktop database.
BCBS239 does not itself preclude the usage of spreadsheets and end user computing, but rather like a lot of regulation says that their usage must be taken seriously - in my view there is a tendency for some in IT to regard spreadsheets as someone else's problem, which is understandable but problematic for any CDO. Also there are approaches to spreadsheet usage that can help maintain data lineage, such as what Microsoft offers with web provision of spreadsheet dashboards using PowerView and PowerBI (used in our TimeScape MarketPlace offering), folks such as Cluster7 with their "closed circuit TV" for spreadsheet monitoring, and indeed Xenomorph with our SpreadSheet Inside approach of including centralised spreadsheet-like calculations as a supported data type within the audited data management process.
Data Dictionary - Mikael said that one responsibility he had was to represent the investment bank within the wider data dictionary initiatives due to BCBS239 at the retail bank, and said that this was challenging given the different terminology sometimes used.
Is BCBS239 a Project or Data Governance? - The panel thought that the best approach was to use BCBS239 as a framework for compliance with current regulation and regulation to come, but that this needs to obviously be subject to having the budget to do so. There were some general comments on how the data management needs of the front office and risk were converging. Standards such as FIBO were also discussed, with feedback being that they are desirable but that it is early days where their immaturity means they are often used for specific areas such as modeling counterparty data.
Overall a good panel (I hope!) with a good amount of audience questions and participation. Again you can find some of the main points from the various panels at via @XenomorphNews or more generally by #dmslondon (you could also find out a bit via my twitter account @TheLongSentance so long as you don't mind the odd photograph and a few bits of personal baggage now and again).
A bit of fun - Brian looking up to Ron Wilbraham at DMS London
Posted by Brian Sentance | 14 October 2014 | 12:19 am
A-Team’s DMS Data Management Awards close on the 26th of September so if you haven't already, please vote for Xenomorph!
Xenomorph on the Cloud - First of a few lookbacks at what we have been doing over the past year - firstly with a short animation about one of our major initiatives this year, cloud provision of data management and a new venture into cloud-based data publishing with the TimeScape MarketPlace.
So it would be fantastic if you could support Xenomorph by voting here.
Posted by Brian Sentance | 11 September 2014 | 7:21 pm
Very pleased to announce that we have been nominated again this year in the A-Team’s DMS Data Management Awards. The categories we’ve been selected for are:
- Best Sell-Side Enterprise Data Management Platform
- Best Buy-Side EDM Platform
- Best EDM Platform (Portfolio Pricing & Valuations)
- Best Risk Data Aggregation Platform
- Best Analytics Platform.
Last year we were delighted to win the Best Risk Data Management/Analytics Platform award – even more so as the awards are voted for by our clients and industry peers.
So if you would like to support us again this year the voting is open now:
and runs through to the 26th September. The award winners will be announced at A-Team’s Data Management Summit, at the America Square Conference Centre in London on October 8th.
Posted by Kerry Johnson | 5 August 2014 | 12:09 pm
Bit late in posting this up, but given I did something about RainStor I thought I should write up my attendance at a MarkLogic event day in downtown Manhattan from several weeks back - their NoSQL database is used to serve up content on the bbc web site if you wanted some context. They are unusual for the NoSQL “movement” in that they are a proprietary vendor in a space that is dominated by open source databases and the companies that offer support for them. The database they most seem to compete with in the NoSQL space seems to be MongoDB, where both have origins as “document databases” (- managing millions of documents is one of the most popular uses for big data technology at the moment, though not so much publicized as more fashionable things like swallowing a twitter feed for sentiment analysis for example).
In order to cope with the workloads needing to be applied to data, MarkLogic argue that data has escaped from the data centre in terms of need separate data warehouses and ETL processes aligned with each silo of the business. They put forward the marketing message that MarkLogic allows the data to come back into the data center given it can be a single platform for where all data lives and all workloads applied to it. As such it is easy to apply proper data governance if the data is in one place rather than distributed across different databases, systems and tools.
Apparently MarkLogic started out with the aims of offering enterprise search of corporate data content but has evolved much beyond just document management. Gary Bloom, their CEO, described the MarkLogic platform as the combination of:
• Search Engine
• Application Services
He said that the platform is not just the database but particularly search and database together, aligned with the aim of not just storing data and documents but with the aim of getting insights out of the data. Gary also mentioned the increasing importance of elastic compute and MarkLogic has been designed to offer this capability to spin up and down with usage, integrating with and using the latest in cloud, Hadoop and Intel processors.
Apparently one of the large European investment banks is trying to integrate all of their systems for post-trade analysis and regulatory reporting. The bank apparently tried doing this by adopting a standard relational data model but faced two problems in that 1) the relational databases were not standard and 2) that it was difficult to get to and manage an overarching relational schema. On the schema side of things, the main problem they were alluding to seemed to be one schema changing and having to propagate that through the whole architecture. The bank seems now to be having more success now that they have switched to MarkLogic for doing this post-trade analysis – from a later presentation seems like things like trades are taken directly from the Enterprise Service Bus so saving the data in the message as is (schema-less).
One thing that came up time and time again was their pitch that MarkLogic is “the only Enterprise NoSQL database” with high availability, transactional support (ACID) and security built in. He criticized other NoSQL databases for offering “eventual consistency” and said that they aspire to something better than that (to put it mildly). I thought it was interesting over a lunch chat that one of MarkLogic guys said that "MongoDB does a lot of great pre-sales for MarkLogic" meaning I guess that MongoDB is the marketing "poster child" of NoSQL document databases so they get the early leads, but as the client widens the search they find that only MarkLogic is "enterprise" capable. You can bet that the MongoDB team disagree (and indeed they do...).
On the consistency side, Gary talked about “ObamaCare” aka HealthCare.gov that MarkLogic were involved in. First came some performance figures of how they were handling 50,000 transactions/sec with 4-5ms response time for 150,000 concurrent users. This project suffered from a lot of technical problems which really came down to problems of running the system based on a fragile infrastructure with weaknesses in network, servers and storage. Gary said that the government technologists were expecting data consistency problems when things like the network went down, but the MarkLogic database is ACID and all that was needed was to restart the servers once the infrastructure was ready. Gary also mentioned that he spent 14 years working at Oracle (as a lot of the MarkLogic folks seem to have) but it was only really until Oracle 7 that they could really say they offered data consistency.
On security, again there was more criticism of other NoSQL database for offering access to either all of the data or none of it. The analogy used was one of going to an ATM and being offered access to everyone’s money and having to trust each client to only take their own. Continuing the NoSQL criticism, Gary said that he did not like the premise put around that “NoSQL is defined by Open Source” – his argument was that MarkLogic generates more revenue than all the other NoSQL databases on the market. Gary said that one client said that they hosted a “lake of data” in Hadoop but said that Hadoop was a great distributed file system but still needs a database to go with it.
Gary then talked about some of the features of MarkLogic 7, their current release. In particular that MarkLogic 7 offered scale out elasticity but with full ACID support (apparently achieving one should make it not possible to achieve the other), high performance and a flexible schema-less architecture. Gary implied that the marketing emphasis had changed recently from “big data” pitch of a few years back to include both unstructured and structured data but within one platform, so dealing with heterogeneous data which is a core capability of MarkLogic. Other features mentioned were support for XML, JSON and access through a Rest API. Usage of MarkLogic as a semantic database (a triple store) and support for the semantic query language Sparql. Gary mentioned that semantic technology was a big area of growth for them. He also mentioned support for tiered stored on HDFS.
The conversation them moved on to what’s next with version 8 of Mark Logic. The main thing is “Ease of Use” for the next release with the following features:
• MarkLogic Developer – freely downloadable version
• MarkLogic Essential Enterprise – try it for 99c/hour on AWS
• MarkLogic Global Enterprise – 33% less (decided to spend less time on the sales cycle)
• Training for free – all classes sold out – instructor led online
Joe Pasqua, SVP of Product Strategy, then took over from Gary for a more technical introduction to the MarkLogic platform. He started by saying that MarkLogic is a schema-less database with a hierarchical data model that is very document-centric, and can be used for both structured and unstructured data. Data is stored in compressed trees with the system. Joe then explained how the system is indexed explaining the “Universal Index” which lists where to find the following kinds of data as in most good search engines:
• Stemmed words and phrasing
• Structure (this is indexed too as new documents come in)
• Words and phrases in the context of structure
• Security Permissions
Joe also mentioned that a “range index” is used to speed up comparisons, apparently in a similar way to column store. Geospacial indices are like 2D range indices for how near things are to a point. The system also supports semantic indices, indexing on triples of subject-predicate-object.
He showed how the system has failover replication within a database cluster for high availability but also full replication for disaster recover purposes. There were continual side references to Oracle as a “legacy database”.
On database consistency and the ACID capability Joe talked about MVCC (Multi Version Concurrency Control). Each “document” record in MarkLogic seems to have a start and end time for how current it is, and these values are used when updating data to avoid any reduction in read availability. When a document is updated a copy of it is taken but made hidden until ready – the existing document remains available until the update is ready, and then the document “end time” in the old record is marked and the “start time” marked on the new record. So effectively always doing append in serial form not seeking on disk, and the start and end time for the record enables bitemporal functionality to be implemented. Whilst the new record is being created it is already being indexed so there is zero latency searching once the new document is live.
One of the index types mentioned by Joe was a “Reverse Index” where queries are indexed and as a new document comes in it is passed over these queries (sounds like the same story from the complex event processing folks) and can trigger alerts based on what documents fit each query.
In summary, the event was a good one and MarkLogic seems interesting technology and there seems to be a variety of folks using it in financial markets with the post trade analysis example (bit like RainStor I think though, as an archive) and others using it more in the reference data space. Not sure how much MarkLogic is real-time capable – seems to be a lot of emphasis on post trade. Also brought home to me the importance of search and database together which seems to be a big strength of their technology.
Posted by Brian Sentance | 11 July 2014 | 9:36 pm
We had over 60 folks along to our event our the Merchant Taylors' Hall last week in London. Thanks to all who attended, all who helped with the organization of the event and sorry to miss those of you that couldn't come along this time.
Some photos from the event are below starting with Brad Sevenko of Microsoft (Director, Capital Markets Technology Strategy) in the foreground with a few of the speakers doing some last minute adjustments at the front of the room before the guests arrived:
Rupesh Khendry of Microsoft (Head of World-Wide Capital Markets Solutions) started off the presentations at the event, introducing Microsoft's capital markets technology strategy to a packed audience:
After a presentation by Virginie O'Shea of Aite Group on Cloud adoption in capital markets, Antonio Zurlo (below) of Microsoft (Senior Program Manager) gave a quick introduction to the services available through the Microsoft Azure cloud and then moved on to more detail around Microsoft Power BI:
After Antonio, then yours truly (Brian Sentance, CEO, Xenomorph) gave a presentation on what we have been building with Microsoft over the past 18 months, the TimeScape MarketPlace. At this point in the presentation I was giving some introductory background on the challenges of regulatory compliance and the pros and cons between point solutions and having a more general data framework in place:
The event ended with some networking and further discussions. Big thanks to those who came forward to speak with me afterwards, great to get some early feedback.
Posted by Brian Sentance | 30 June 2014 | 8:05 pm
As one person I cannot change the world, but I can change the world of one person – Paul Shane Spear. As a mantra, not many come better to live by.
According to cdc.gov, each year about 8 million people die from cancer and 14 million people are diagnosed with it. To put things into perspective, twice as many people die from cancer than AIDS, malaria and tuberculosis combined. The American Cancer Society (ACS) is a voluntary health organization dedicated to the elimination of cancer. Anything that we as individuals, groups or institutions can do to assist in this regard is valued as every effort helps to aid in research and clinical trials that continue the hopes of cancer cures being found.
Into its ninth year, the annual American Cancer Society Financial Services Cares Gala will take place on Tuesday, June 24, 2014 at Cipriani 42nd Street in New York City to bring together leaders in the financial services industry who are invested in the fight against cancer. Xenomorph is proud in its association with the ACS and to be donating a custom men’s suit for the second year running to be auctioned at the event.
Visit the ACS Financial Services Cares Gala page to learn more about the event and how you can get involved.
Posted by Naj Alavi | 26 June 2014 | 5:25 pm
One day to go until our TimeScape MarketPlace breakfast briefing "Financial Markets Data and Analytics. Everywhere You Need Them" at Merchant Taylor's Hall tomorrow, Wednesday June 25th. With over ninety people registered so far it should be a great event, but if you can make it please register and come along, it would be great to see you there.
Posted by Brian Sentance | 24 June 2014 | 11:25 am
Less than one week to go until our TimeScape MarketPlace breakfast briefing "Financial Markets Data and Analytics. Everywhere You Need Them" at Merchant Taylor's Hall on Wednesday June 25th.
Come and join Xenomorph, Aite Group and Microsoft for breakfast and hear Virginie O'Shea of the analyst firm Aite Group offering some great insights from financial institutions into their adoption of cloud technology, applying it to address risk management, data management and regulatory reporting challenges.
Microsoft will be showing how their new Power BI can radically change and accelerate the integration of data for business and IT staff alike, regardless of what kind of data it is, what format it is stored in or where it is located.
And Xenomorph will be demonstrating the TimeScape MarketPlace, our new cloud-based data mashup service for publishing and consuming financial markets data and analytics.
In the meantime, please take a look at the event and register if you can come along, it would be great to see you there.
Posted by Brian Sentance | 19 June 2014 | 4:34 pm
Very pleased to announce that Mizuho Securities USA has completed a successful implementation of TimeScape, you can see the press release here and more detail is available in this article on Inside Reference Data. Big thank you to all those involved in making this happen, both at Mizuho and on the Xenomorph team.
Posted by Brian Sentance | 18 June 2014 | 11:12 am