The Paris boutique that codes 'homemade Aladdin'
US asset manager BlackRock claims 25,000 investment professional users of Aladdin, its operating investment plaform dedicated to portfolio managers. The company says the system is powered by more than 1,000 developers.
In contrast, Paris-headquartered investment boutique Sepiam only counts four individuals, two of which having settled in a co-working space of a building facing the French asset management association AFG in the eighth surrounding of the French capital.
The tiny office of the 'quantamental' manager forms the day-to-day operational centre of co-founders Damien Grulier, chairman, and Yohan Kadri-Caillaux, chief executive and chief investment officer. Third co-founder and head of private wealth management Sébastien Lippens is based in Brussels where his former company’s offices became Sepiam’s Belgian branch. The French boutique took over management, administration and distribution of La Cambre Funds’ Sicav (now SPM Funds) in November 2018.
Grulier’s background links with information technology as he previously held roles of head of risk management and quantitative research at Exane BNP Paribas and Raymond James Asset Management International and developed risk-related softwares for Reuters. At RJAMI, he met with Kadri-Caillaux who worked there as asset allocation and multi-asset portfolio manager. Kadri-Caillaux started as an analyst at Richelieu Finance where he was Lippens’ fellow colleague.
By gathering IT skills, Sepiam's founding trio has coded the boutique’s entire front-to-back solution from scratch.
“In other terms, we have designed our own optimised Aladdin that not only fulfills all middle and back-office functions such as compliance, audit and asset allocation sharing but also produces high-end tailored reports. We have received a regular and positive feedback from independent consultants and auditors for it.
“A lot of traditional asset managers have no expertise in new technologies therefore they tend to either not digitalise their back and middle-office or outsource it through other providers’ solutions like Aladdin. We have saved a huge amount of time and money by building our own solution”, Sepiam’s Kadri-Caillaux says.
He specifies that the platform encompasses various cyber-security and high availability technologies, including a double authentification with a mobile key number, data geo-redundancy and pro-active monitoring of intrusion attempts or automatic recovery in the event of a disaster.
The founders possess strong tech knowledge, two of them were engineering students and had long experience in programming for either hedge funds, investment banks or software providers prior to establishing Sepiam. In addition, they spent tremendous amount of time in self-training.
“We realised through past experiences that mastering programming and IT developments was necessary to improve the management of our portfolios and of our company. In our previous jobs, we developed systems with common points to our current platform and that has enabled us to have a precise idea of the ‘ideal’ asset management IT solution.
“The challenge has been to build a new solution that was designed as from the start for the cloud, scalability, security and best coding practices (DDD, TDD, BDD among others) while using current technologies (.net core, Vue),” Kadri-Caillaux explains.
Mastering IT is becoming as crucial as mastering languages such as English.
Yohan Kadri-Caillaux, CEO-CIO, Sepiam
These IT abilities enabled the trio to not outsource software building to an external developer. Sepiam’s CEO-CIO says that nowadays asset managers could end up in absurd situations where operational staff and IT developers do not understand each other and struggle to communicate, and that regardless of the amount of money committed to the development of the solution.
“Developers need to appropriate the basis of operational works and vice versa. There are several cons when you integrate internal or external developers with not enough knowledge of markets, regulation, the asset management business or who do not show enough interest in these areas”, underlines Kadri-Caillaux.
Sepiam started the development of its platform in 2017, a time-consuming step in the company’s setup but the founders now reap the benefits of it, the firm’s CEO-CIO says. Kadri-Caillaux asserts the trio has saved time in day-to-day management, whether that is in the decision-making process, risk management, back-middle office operations or compliance, and this with a high level of transparency, audit and accuracy.
Kadri-Caillaux adds programming a specific function on Sepiam’s software could take a few hours and that the most important in developing a front-to-back platform remains being both the product developer and user.
“We cannot develop a performing system encompassing middle-office, compliance, NAV validation if you do not know what it means, how it can be used, what important information it shall show, etc. A requirements specification document can hardly substitute to work experience. It is our platform strength: it is made by portfolio managers for portfolio managers”, he says.
Sepiam has further plans to customise more the platform for each portfolio manager and add new tools to support the decision-making process in its funds and mandates. Its CEO-CIO suggests it is more than likely that IT skills will be ever more sought in fund managers’ profiles in the near term. “Whatever your business sector is, mastering IT tools becomes ever more important. Children are taught programming languages in early stages at school now and it is becoming as crucial as mastering languages such as English.”