August 2018: Push the Boundaries, Baby

Pushing boundaries can lead to innovation and alpha, as long as the industry remains congnizant of where and how far they push.

Jamie Hyman 2017

Like most parents, before my first child was born, I read some books about what to expect.

At the time, the parenting advice racket was all about how mothers from other cultures are all far better at raising their children than American moms: Chinese Type-A tiger moms, Danish parents raising the happiest babies in the world, and—I am not making this up—Achtung Baby, a guide to raising self-reliant children, like German parents do. I admit I did not discover many practical suggestions, but one book offered a concept that stuck with me. Bringing Up Bébé is, of course, all about how to raise your kid like a French parent.
Its core philosophy is that parents should set and strictly enforce boundaries, but the trick is that from inside the confines of the rules, children have total freedom. In other words, parents set up the framework, but from within, the children get to determine what they do, create and become.

Our feature on data governance and innovation reminds me of the advice for parents of bébés. As regulations continue to roll out, some data leaders are concerned about how increasing governance could inhibit innovation. However, as Amelia Axelsen reports, there is a different view: that governance is an essential component to data innovation because otherwise, new applications are built on shaky, unreliable foundations.

Of course, innovation also involves pushing those boundaries. Max Bowie investigates approaches to cost management that are both creative themselves, but also free up the budget necessary to innovate. And I had a conversation with Chris Sharp, Old Mutual Global Investment’s head of data, breaking down how the firm’s data governance transformation, when coupled with a decision to outsource benchmark data management, has not only revolutionized the way it approaches data usage, but done wonders for its bottom line.

When regulators push boundaries, however, the results can be cumbersome for the market. Reporting for, Sam Wilkes takes a magnifying glass to Mifid II, finding that in some areas, the regulation intended to increase transparency renders posttrade data more opaque than before. And Amelia Axelsen examines the Securities Financing Transaction Regulation to determine whether, when it comes to the goal of shedding light on shadow banking, SFTR is overkill.

On balance, it appears that setting boundaries and pushing past them is a net gain for the market, so we are likely to see innovators continue to repousser les limites.

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