Xenomorph Signs Société Générale; Upgrades Platform
November 12, 2007
Société Générale's asset servicing arm is bolstering its financial engineering group's ability to handle complex structured products with data management technology provider Xenomorph's cross-asset-class TimeScape platform.
"We needed a tool to help us better manage complex data structures and calculate derivative correlations dynamically for our value-added services, and TimeScape is able to do precisely that," said Rachid Lassoued, head of financial engineering at Paris-based Société Générale Securities Services (SGSS).
The platform is designed to combine data management systems with derivatives pricing analysis software and fixed-income portfolios, providing a single view of data related to multiple asset classes. TimeScape launched in 2003 and is slated for a major upgrade later this month.
Lassoued noted that his department regularly filters and assesses a wide range of data streams--piped in from more than 15 sources, all in different formats--related to derivatives and the pricing of structured products. The unit also processes information related to 70 different currencies, more than 2,000 credit curves and 5,000 volatility surfaces, each composed of between 200 and 500 data points. "You can just imagine how complex it is," he said.
He continued: "Unlike other data management platforms that concentrate on handling corporate actions or other back-office functions, TimeScape is able to handle data related to complex data structures, such as volatility surfaces for any asset class or correlation matrixes on credit spreads. In the complex structured product area, they have no competition."
Lassoued praised the platform's ability to interface with Excel, allowing for greater security in derivatives data handling. "You can encapsulate Excel sheets within the TimeScape platform," he said, adding, "when you move or change something, you have an audit trail, which we didn't have before."
Keeping Pace
The five-year agreement with Xenomorph comes as investment banks and financial institutions are facing data management challenges associated with the mounting volumes of diverse derivatives activity. The International Swaps & Derivatives Association in June reported that the notional amount outstanding of credit derivatives grew by 32 percent in the first six months of the year; equity derivatives rose by 39 percent, from $7.18 trillion to $10.01 trillion.
The deal gives Xenomorph, a 12-year-old company with offices in London and New York, a notable new client--one with $2.85 trillion in assets under custody and $480 billion under administration in Europe.
The deal reflects "the growing market in derivatives and structured products in Europe," said Xenomorph CEO Brian Sentance. "Firms such as SGSS are scaling up to provide derivatives evaluation, risk management and all kinds of derivatives pricing services to support hedge funds in all the growth we are seeing in this market," which, he added, is good news for multi-asset data management systems.
Xenomorph's data management tools compete with offerings from Kx Systems in Palo Alto, Calif. and Vhayu Technologies of Los Gatos, Calif.; Bedford, Mass.-based Progress Software Corp.'s Apama unit and Great Neck, N.Y.-based FlexTrade Systems are rivals in the decision support area.
TimeScape was installed at SGSS over a six-month period, Sentance said. The project came in on time and involved two people from Xenomorph and a technical consultant from Computer Sciences Corp. The platform is fully integrated with London-based Misys' Summit, a platform used by SGSS for processing over-the-counter instruments, with Xenomorph providing the data management layer.
