Signal versus noise

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“Say you look at information on a yearly basis, or stock prices, or the fertilizer sales of your father-in-law’s factory in Vladivostok. Assume further that for what you are observing, oat a yearly frequency, the ratio of signal to noise is about one to one (half noise, half signal) — this means that about half the changes are real improvements or degradations, the other half come from randomness. This ratio is what you get from yearly observations. But if you look at the very same data on a daily basis, the composition would change to 95 percent noise, 5 percent signal. And if you observe the data on an hourly basis, as people immersed in the news and market price variations tend to, the split becomes 99.5 percent noise to 0.5 percent signal. That is two hundred times more noise than signal — which is why anyone who listens to news (except when very, very significant events take place) is one step below sucker.”

—Nassim Nicholas Taleb, Antifragile

signal-to-noise ratio
/ˈsɪgnl-tuː-nɔɪz ˈreɪʃɪəʊ/ (n.)
The ratio of the strength of an electrical or other signal carrying meaningful information to that of unwanted interference within which it is presented. In a legal tract, the amount of noise greatly exceeds the signal.

The signal-to-noise ratio and the tragedy of the digital commons: data is now costless, so we drown in it. But there is no more “signal” then there was 50 years ago. Attention spans haven’t changed. Transaction capacities haven’t changed: there is just more noise. Noise is unlimited and free.

So: how to add value in this time of digital plenty? Extract signal from noise.

Where are the machines which will help us do this?

Covenant to pay

File, with all the other dross, under “why is legaltech so disappointing?”

Noise	Signal
The Issuer shall,on any date when any payment of principal in respect of the Notes becomes due and payable, in whole or in part, unconditionally pay it to or to the order of the Trustee in the Contractual Currency, in the case of any Contractual Currency other than euro, in the principal financial centre for the Contractual Currency, and, in the case of euro, in a city in which banks have access to the TARGET System, in same day or immediately available funds, the relevant Early Redemption Amount or Final Redemption Amount of the Notes, as applicable, on that date, together with any applicable premium and shall (subject to the Conditions) until such payment (both before and after judgment) unconditionally pay to or to the order of the Trustee together with interest in respect of the nominal amount of the Notes outstanding as set out in the Conditions.(subject to Clause 3.1), provided that (i) subject to the provisions of Clause 4.2, Payment of any sum due in respect of the Notes made to the Issuing and Paying Agent as provided in the Agency Agreement shall, to that extent, satisfy such obligation unless it is not paidexcept to the extent that there is failure in its subsequent payment to the relevant Noteholders or Couponholders. under the Conditions and (ii) a payment made after the due date or where theas a result of the Notes are becoming repayable early will be satisfiedpursuant to Master Condition 8 (Redemption and Purchase) shall be deemed to have been made when the full amount due has been received by the Issuing and Paying Agent or the Trustee and notice to that effect has been given to the Noteholders (if required under Clause 15), except to the extent that there is a failure in its subsequent payment unless it is not then paid to the relevant Noteholders or Couponholders under the Conditions. This covenant shall only have effect each time Notes are issued and outstanding, when The Trustee shall, upon execution of the relevant Issue Deed, holds the benefit of this covenant on trust for itself and the Noteholders and Couponholders of the relevant Series according to their respective interests.	The Issuer shall, when any payment of principal becomes due, unconditionally pay it to the Trustee in the Contractual Currency together with interest as set out in the Conditions. Payment to the Issuing and Paying Agent shall satisfy such obligation unless it is not then paid to the holders. Payment made after the due date or where the Notes are repayable early will be satisfied when received by the Issuing and Paying Agent unless it is not then paid to the holders. The Trustee holds this covenant on trust for itself and the holders.
The Issuer shall, when any payment of principal becomes due, unconditionally pay it to the Trustee in the Contractual Currency together with interest as set out in the Conditions. Payment to the Issuing and Paying Agent shall satisfy such obligation unless it is not then paid to the holders. Payment made after the due date or where the Notes are repayable early will be satisfied when received by the Issuing and Paying Agent unless it is not then paid to the holders. The Trustee holds this covenant on trust for itself and the holders.	The Issuer must unconditionally pay principal when it becomes due in the Contractual Currency, with interest, as set out in the Conditions. The Issuer can satisfy that obligation by payment to the Issuing and Paying Agent, provided the Issuing and Paying Agent then pays Noteholders. The Trustee holds this covenant on trust for the Noteholders.

See also

• Signal-to-noise ratio
• Nassim Nicholas Taleb, Antrifragile
• Covenant to pay