Microsoft buys stake in London Stock Exchange

Microsoft is to take a 4% equity stake in London Stock Exchange Group (LSEG) as part of a 10-year commercial deal to migrate the exchange operator’s data platform into the cloud.

It is the latest sign of deepening ties between financial services providers and some global cloud companies such as Microsoft, Google, Amazon and IBM.

Regulators have expressed concern about the over-reliance of financial firms and exchanges on too few cloud providers.

LSEG has made a contractual commitment for minimum cloud-related spend with Microsoft of $2.8 billion over the term of the partnership.

LSEG said: “London Stock Exchange Group (LSEG) and Microsoft have entered into a new long-term strategic partnership to architect LSEG’s data infrastructure using the Microsoft Cloud, and to jointly develop new products and services for data and analytics.

“The partnership will build on the good progress made by LSEG on the integration of Refinitiv and enhance its position as a world-leading financial markets infrastructure and data provider.

“With the Microsoft Cloud and its AI capabilities, the deal significantly advances LSEG’s strategy of building an efficient and scalable platform for its Data & Analytics business to deliver next-generation services for a range of customers across the financial markets value chain through improved workflow and greater flexibility.

“Under the arrangements, LSEG’s data platform and other key technology infrastructure will migrate into Microsoft’s Azure cloud environment.

“Workspace, LSEG’s next-generation data and analytics workflow solution, will become interoperable with certain Microsoft applications and the companies plan to introduce innovative new cloud-based analytics services.

“LSEG and Microsoft have also agreed to explore the development of digital market infrastructure based on cloud technology, with a goal to transform how market participants interact with capital markets across a broad range of asset classes.

“Migration of regulated applications will be subject to applicable regulated entity board and regulator approval, prior to the relevant migration.”

LSEG CEO David Schwimmer said: “This strategic partnership is a significant milestone on LSEG’s journey towards becoming the leading global financial markets infrastructure and data business, and will transform the experience for our customers.

“Bringing together our leading data sets, analytics, and global customer base with Microsoft’s comprehensive and trusted cloud services and global reach creates attractive revenue growth opportunities for both companies.

“We are delighted to welcome Microsoft as a shareholder. We believe our partnership with Microsoft will transform the way our customers discover, analyse, and trade securities around the world, and create substantial value over time. We look forward to delivering on that potential.”

Microsoft chairman and CEO Satya Nadella said: “Advances in the cloud and AI will fundamentally transform how financial institutions research, interact, and transact across asset classes, and adapt to changing market conditions.

“Our partnership will bring together the industry leadership of the London Stock Exchange Group with the trust and breadth of the Microsoft Cloud – spanning Azure, AI, and Teams – to build next-generation services that will empower our customers to generate business insights, automate complex and time-consuming processes, and ultimately, do more with less.”