Genesis

For the last few years I’ve been considering how to apply the fundamental ideas behind the IT solutions and financial instruments that have been created in FOREX, Securities and Futures exchanges and Payments Clearing and Settlement mechanisms to other sectors with the goal of achieving self financing innovation.

The free exchange of ideas has been the principal driving force behind innovation in every field of human endeavour. Our culture, politics, laws, scientific knowledge, technology and the development of the human condition have all been enhanced by collaboration and the flow of ideas through the exchange of information. In our current epoch the technologies that enable the open exchange of information are available at the finger tips of a third of the worlds population yet, powerful cultural, legal, territorial and commercial disincentives to the free exchange of information remain, and in many areas of science and broader society, a culture that restricts collaboration prevails. Beyond these threats to the transparent and free exchange of information is the growing entropy that results from propaganda and ignorance which continues to erode the value of information and increases the cost of its extraction.

An elegant and proven solution to these problems is the creation of a open regulated exchange, bringing together producers and consumers of information and facilitating secure and transparent exchange. Financial exchanges, if they are governed properly, provide a fair platform for participants to exchange their goods and services and or engage in speculation. If they operate efficiently and provide services that are demanded by their customers the exchange increases the volume of trade to the financial benefit of all participants. Information exchanges can do the same for innovation.

My thesis is simply that the creation of Information Exchange which I define as a platform of services and a system of governance that facilitates the exchange of information between participants that create and/or consume information will result in greater collaboration between the participants and the increased volume of information exchanged will drive innovation. What is more I propose that such exchanges can be created for any sector, whether it’s government, health care, military or scientific endeavour, an Information Exchange will drive innovation, making its application universal. Finally by implementing financial speculative instruments based on the value of information as measured by its utility both within the exchange and externally, the innovation will be self financing with no need of state funding.

Conceptually it is useful to consider the Information Exchange (IEX) from two different perspectives, organisational and technical. From an organisational perspective the Information Exchange is an institution which is dedicated to catalysing collaboration between its participants and protecting the information assets they invest in the exchange. To this end the IEX seeks to shoulder the burden of legal, regulatory and security compliance on behalf of its participants. Furthermore the IEX endeavours to reward its participants not only by ensuring that any innovation that is attributed to their information asset is fully acknowledged, but also by offering access to unprecedented analytic services for the mining of the rich seams of data which the exchange aggregates from its participants thus giving all participants a foundation for innovation.

From a technical perspective the IEX is a secure computational hub, an enterprise system for the analysis of digital data. The system facilitates the rapid and secure exchange of information resulting from analysis carried out on an aggregate of public and private data; information assets invested in the exchange by participating members.

The differentiation between information exchange and data sharing is an essential proposition of the exchange. Data sharing requires the data owner to agree to provide access (and potentially a wide range of other rights as well as obligations) to data with other parties under a contractual agreement. The sharing of data will typically result in the data being duplicated and distributed to multiple consumers. Obtaining data sharing agreements for privately held data or data of a sensitive nature is typically difficult, time consuming and expensive. For the data producer the problem is compounded by multiplicity of agreements which they may be requested to negotiate and for the consumer simply identifying relevant data for their analysis can be thwart with difficulty.

Information sharing within the exchange is the sharing of the results of an analytic service provided by the exchange between participant members. While the underlying data used in the analysis may be private and sensitive in nature the results of exchange services based on the data will be cleansed of information that could be used to compromise the confidentiality of the data and will ensure compliance in legality, regulation and security. Data providers need only negotiate terms of sharing with the exchange. This paradigm provides the benefits of sharing data by allowing participants access to information from analysis conducted on that data but minimises the risks and costs associated with sharing data with multiple consumers. The data is never shared, rather the information is exchanged.

In my next entry I will describe in more detail the mechanisms available for participants to invest information assets into the exchange and the underlying IT architecture of an exchange.