Jeremy Hintze, coo at ClearStructure, answers SCI's questions

Q: How and when did ClearStructure become involved in the structured credit/ABS market?
A: ClearStructure started as the IT\systems group of Atlantic Asset Management (Atlantic) in Stamford, Connecticut, back in 1993. We built an internal portfolio management system to manage all of Atlantic's fixed income portfolios.

In 1998 Atlantic issued its first CDO. When we were unable to find anything in the market which could handle CDO management, we decided to build it ourselves. Other institutions heard about the strength of our system and expressed interest, so shortly after that we decided to start selling our system to the broader market.

Q: How has your service/offering developed since then?
A: ClearStructure originally focused on the CDO market, but - given our clients' demand for our system's sophistication across other classes along with the market's growth - we quickly expanded to handle any type of collateralised asset. In addition, we built a robust loan administration module to handle syndicated loans.

Currently, in the ABS space we offer structured finance capabilities, such as waterfall and compliance, as well as front to back office portfolio management tools, such as Performance Measurement & Attribution, GIPS-compliant reporting, reconciliation and data integration. We've added integration with several cashflow engine providers to provide cashflows for ABS tranches our clients may hold.

Our experience in the CLO market led to a robust loan administration system and eventually a new syndicated loan trading product we launched in 2009, Sentry LT.

As far as how we offer our products, back in 2004 we converted Sentry from a legacy-type client-server application to a web-based application utilising the latest technology. We saw the move towards web-based systems that were easier to deploy and could be hosted, thus eliminating the need for the client to install costly hardware and deal with the daily maintenance. We pride ourselves on keeping the product in lock-step with the latest technological advances to best position our clients to take advantage of opportunities as the market presents them.

Q: Which market constituent is your main client base? Do you focus on a broad range of asset classes or only one?
A: Coming out of Atlantic, we have traditionally serviced the buy-side and the majority of our client base is from the buy-side. However, we do have products that are sold to the sell-side; specifically our loan trading product, Sentry LT.

We support a broad range of asset types in addition to ABS. We handle syndicated loans, futures, options, swaps, equities, credit default swaps of all types, repos and several additional financial instruments.

Q: How do you differentiate yourself from your competitors?
A: Our vast experience in the structured finance world and specific knowledge of the complexities and the quick changing nature of the structures forced us to ensure our application architecture was flexible, so that we could quickly adapt to changing market requirements as well as client requests for enhancements and new features. Having started as part of an asset management firm, we tend to approach product development from the business side of the problem and have a deep understanding of what asset managers need. Clients have always appreciated our ability to close the gap between technology and user requirements.

Q: Which challenges/opportunities does the current financial environment bring to your business and how do you intend to manage them?
A: The current environment demands an increased focus on transparency and accessibility. We've found that the turmoil in financial markets has altered investor habits and heightened the need for information.

Our platform was built with ultimate transparency in mind and we find our clients leveraging all aspects of this functionality. All of our calculations are spelled out, so there are no 'black-box' calculations or wondering where a particular waterfall value, compliance test result, interest amount, pay-down, trade fee etc came from.

As part of all of our Sentry products, we offer an internet portal for our clients to make available to their investors and even others within their organisation. The portal includes interactive reporting, portfolio stratification and several other customisable features which provide value to the investor, but which the manager can restrict in terms of permissions and accessibility.

Given the elevated focus on risk management, we have added many risk analysis tools that aid in determining risk in the current portfolio and forecasting performance based on multiple scenarios.

Q: What major developments do you need/expect from the market in the future?
A: A major trend that we see continuing on the part of investors and asset managers is the diversification of their investment strategies. For such diversification to be successful, investors need to seek better, more comprehensive tools to manage and monitor risk. Such a single platform that supports multiple asset types and management strategies, while providing the transparency investors are increasingly coming to require, will be demanded and certainly plays to our strengths.