An Englishman in New York

by Max Bowie

Analytics databases are important tools in today's financial markets - both for risk management and testing trading strategies. But how they are used depends on the type of firm, and even on which side of the Atlantic it is based, says Xenomorph chief executive Brian Sentance, who discusses his own transatlantic crossing to boost the vendor's US presence.

IMD: You've recently moved from Xenomorph's headquarters in London to the US. What prompted that change, and what are your plans for your time in the US?

Sentance: Last year, the four owner-directors of Xenomorph thought the company was ready to spread its reach, and that to have the directors more dispersed geographically would be good for our clients and the growth of the business. Our New York operation has recently accelerated its client growth and is potentially our biggest market, so we decided that I should assist our team here with marketing our products and services.

IMD: How is Xenomorph's Americas business evolving? Where are you seeing most interest in TimeScape?

Sentance: The first challenge faced by our New York office was to answer the question, "Who are your clients?" We would cite our blue-chip investment bank and asset manager clients in Europe - some with offices in New York - but the question would then be, "Who are your US clients?" Now, things have changed, with some large US institutions licensing our TimeScape solution. In addition to great work by our US team, this is because prospective US clients accept this is a long-term commitment and that we are not going away anytime soon!

In terms of client needs, the focus in Europe seems mostly to be around data management for risk at banks and over-the-counter valuation management at asset managers. In the US, most of our initial sales have been to hedge funds - with TimeScape used for implementing and back-testing strategies, time-series calculations and decision-support analysis - while there seems to be less use of data management for risk. I would like to understand this better, as risk is an obvious growth area given the coming regulatory changes and investor desire for more transparency.

IMD: When you target a new market or region, are there any significant developments required to tailor your technology for local use?

Sentance: Not many core product changes have been needed, but TimeScape is built with customization in mind so it is easy for clients to integrate their own analytics and data into the system. At the moment, we are focused on improving functionality and ease of use, though we may need to give more consideration to multi-language capabilities to deal with the expanding Asian market.

IMD: Last December, Xenomorph expanded its sales, support, consultancy and product development teams in the UK. What results have you seen from that, and are you planning any further hires?

Sentance: The most notable difference has been an improvement in our ability to deal with more large-scale projects simultaneously. We are currently completing three large-scale projects, and expect more to follow. Other changes include the expansion of our software team to cover the growth in product functionality, as well as consolidating our product development and consultancy teams to achieve a more tightly integrated approach to client implementations and product development.

IMD: In light of the recent economic turbulence, are firms changing the way they approach data management projects? What key priorities are they looking for?

Sentance: The recent crisis highlighted the need for consistent and accurate data as a foundation to meet future challenges. Firms are revising their data management strategies, with the key priority being around risk management - an area where institutions are investing the most, driven by regulations and the consequent need for more transparency, but also with the aim of breaking down data silos and increasing convergence between reference and market data management.

The biggest challenge is bridging the gap that still exists between end-users and IT staff who create and manage systems.

Many data management systems are siloed around back-office functionality and seem to ignore front-office data requirements. Firms have to look at the problem as a whole and ensure that the same datasets are available across the back, middle and front office.

Moreover, management of unstructured data must be raised as an issue when defining a data management strategy, and people need to decide whether they want to endorse or fight spreadsheets. The principles of good data management - auditability, security and consistency - should also be applied to managing analytics and models. Derived data is often the most valuable, and if the ultimate objective is to achieve transparency and quality, how can we ignore model data and valuations used?

IMD: What effect is regulation - from derivatives reform to scrutiny of high-frequency trading - having on firms' data management choices? How does TimeScape help firms address those issues?

Sentance: Regulatory pressure is pushing firms to invest in robust and flexible technology to improve the quality of their data processes, from import, cleansing, validation and storage to aggregation, analysis and distribution. TimeScape combines the management of data and analytics in a centralized and audited warehouse, allowing users to add financial instruments and models in minutes - including terms and conditions, pricing, rates, curves, time series, surfaces and custom/OTC attributes - along with extensive validation and analytics. As such, it can be used to control and cleanse multiple sources of market and instrument data for use in downstream systems and to manage derivatives valuations by linking cleansed and validated data with models to value OTC derivatives and structured products in a controlled and scalable system. Technology such as TimeScape Spreadsheet Inside addresses the concerns of spreadsheet risk and control, increasing transparency and consistency of data and calculations across departments, improving data quality, reducing operational risk and helping clients achieve regulatory compliance.

IMD: Do firms typically use the product for real-time data management to support algorithmic trading, or for reference/enterprise data management? Or does this depend on the type and size of firm?

Sentance: Applications in proprietary trading and hedge funds come more from strategy back-testing, addressing the need to transform spreadsheet-based trading infrastructures into more robust and scalable central frameworks. By automating the analysis and prioritizing more trading opportunities, faster, clients can focus on the judgment, experience and qualitative analysis needed to turn quantitative analysis into successful trades.

In Europe, TimeScape is most often used for analytics and data management for risk, providing a platform for all data, calculations and pricing models supporting risk reporting (VaR, scenario management). This requires coverage of all data - from reference data and static/semi-static terms and conditions to market and derived data. Despite the current focus on real-time trading, our real-time capability was first driven by several "risk" clients who wanted to capture and analyze large volumes of intra-day and tick data.

Among asset managers, one of the main drivers has been investor and regulatory pressure on valuation transparency. Here, TimeScape supports a more centralized, auditable approach to populating pricing models with static, market and derived data - enabled by our flexible data model and the ability for clients to configure support for any asset class.

IMD: What internal or third-party applications are firms looking to integrate with TimeScape, and what results have you seen from existing partnerships, such as that with Microsoft to enable TimeScape to run in Microsoft SQL Server 2008?

Sentance: From a strategic angle, we have interest in technologies such as Microsoft HPC, StreamInsight and Velocity, which would further extend TimeScape's real-time data management and analysis capabilities. A lot of the CEP and trading technologies are still weak on historical data storage and analysis, so it would be a good fit to have an OMS that allows users to "record" all data for later analysis.

Some key clients have just taken our TimeScape XDB hosted inside Microsoft SQL Server 2008. The idea is to plug the gap between proprietary database systems that are difficult to use and maintain, and the performance that a specialist database offers for tasks such as time-series analysis - i.e., specialist performance but based on standards. We also plan to extend this technology to Oracle in the coming year.

IMD: What other partnerships and integration options would you consider in future to help further expand Xenomorph's business?

Sentance: In Europe, our professional services partners such as D-Fine, CSC and Detica have been helpful in supporting our expansion, and I will look for similar partners in the US.

In terms of product partnerships, the risk management space is an obvious target, given our success in this area. Many risk/VaR engines are great for calculation and analysis, but regulators often criticize the quality and auditability of the data feeding them. OMSs are another example of "low-hanging fruit" for further co-operation.

CEO Confidential

Name: Brian Sentance
Birth date: Oct. 18, 1965
Hometown: Newark (Nottinghamshire, England)
Current Home: Riverside, CT, USA
Family: Lovely wife, a nine-year-old daughter who loves art and a six-year-old son who is into dinosaurs

Q. What book are you reading currently?
A. Ragtime by E.L. Doctorow and Getting Things Done by David Allen

Q. What CD is in your stereo (or iPod) right now?
A. Revolver by the Beatles

Q. What was the last movie you watched?
A. Toy Story 3 - great movie, but don't let the kids see you cry

Q. Which sports team do you root for?
A. Arsenal and England at soccer

Q. What did you do for your summer vacation?
A. Our last vacation was to Salema, a small fishing village in Portugal

Q. What's your favorite city or place to visit and why?
A. Barcelona for great atmosphere, weather, architecture and food

Q. What newspapers or magazines do you read?
A. The Financial Times, Inside Market Data and any Incisive title!

Q. What was your first paying job and how old were you?
A. Working on a market selling fish with my mother when I was 16

Q. If you could have dinner with any person, real or fictional, dead or alive, who would it be?
A. Dinner with my father

Q. How much sleep do you get?
A. I aim for seven to eight hours