Microsoft and the London Stock Exchange Group (LSEG) have signed a 10-year strategic agreement to migrate the exchange operator’s data platform to the cloud.
The British exchange operator and the American software giant announced the deal, which Microsoft says aims to generate $5 billion in revenue from LSEG and the financial services sector.
As part of the transaction, Microsoft will acquire a 4% interest in the London Stock Exchange Group from the Blackstone/Thomson Reuters Consortium.
London. Photo credit Microsoft
The deal with the London Stock Exchange will see Redmond design the UK Stock Exchange’s “data infrastructure, building intuitive next-generation productivity, data, analytics and modeling solutions using Microsoft Azure, AI and Microsoft Teams.”
LSEG’s data platform and other key technology infrastructure will be migrated to Microsoft Azure, enhancing the existing cloud migration strategy.
This includes Refinitiv platforms, which power over 40,000 financial institutions in 190 countries.
The London Stock Exchange bought financial information company Refinitiv in 2019 for $27 billion.
And Scott Guthrie, executive vice president of Microsoft, Cloud and AI Group, is appointed non-executive director of LSEG.
“This strategic partnership is a significant milestone in LSEG’s journey to become the leading global financial markets infrastructure and data company and will transform the experience for our customers,” said David Schwimmer, CEO of LSEG.
“Combining our leading datasets, analytics and global customer base with Microsoft’s comprehensive and proven cloud services and global reach creates attractive revenue growth opportunities for both companies,” said Schwimmer.
“We are pleased to welcome Microsoft as a shareholder,” said Schwimmer. “We believe our partnership with Microsoft will transform the way our customers discover, analyze and trade securities around the world and will add significant value over time. We look forward to realizing this potential.”
The deal was also welcomed by Microsoft’s CEO Satya Nadella.
“Advancements in cloud and AI will fundamentally transform the way financial institutions research, interact and transact across asset classes, adapting to changing market conditions,” Nadella said.
CEO Satya Nadella
“Our partnership will bring together the industry leadership of the London Stock Exchange Group with the confidence and breadth of the Microsoft cloud – which encompasses Azure, AI and Teams – to develop next-generation services that empower our customers to generate business insights and automate complex and time-consuming processes, ultimately doing more with less,” Nadella said.
LSEG has a 10-year contractual agreement to spend at least $2.8 billion on cloud-related products with Microsoft.
Executive VP and chief commercial officer Judson Althoff expanded on the deal in a blog post on Sunday.
Althoff noted that companies across the capital markets value chain face an “increasingly complex operating environment with macroeconomic headwinds, tightening regulatory controls and increasingly difficult traditional revenue streams.”
He wrote that these conditions put more pressure on companies to reinvent business models and do more with less. However, their outdated platforms, siled information, size limitations, and data overload hinder their ability to deliver the best customer experience, insights, and tools. This requires a digital transformation approach supported by modern cloud and AI technologies.
Althoff noted that LSEG has already begun addressing these issues for their customers and through this strategic partnership we will accelerate that transformation.
Althoff said Microsoft will help democratize financial markets data, as this deal will “help shape an open, centralized financial data platform that will enable seamless data democratization, collaboration, and new monetization opportunities across the financial services ecosystem.”
He also noted that the deal will deliver next-gen workspace experiences through “the next generation of LSEG Workspace on the Microsoft Teams platform, supporting rich experiences in the application of understanding trends and analyzing risk and building scenarios while meeting stringent security, privacy and compliance requirements.”
Microsoft said that LSEG and the company “will work together to jointly develop next-generation analysis and modeling solutions that are cloud-based and enable powerful model construction, validation, diagnostics and deployment using Microsoft Azure AI, Synapse, Power BI, Excel and teams will be able to do with LSEG’s advanced analysis and modeling capabilities.”
The Microsoft acquisition is expected to close in the first quarter of 2023, subject to regulatory approval.
Regulators have historically expressed concern about financial firms’ over-reliance on too few cloud providers, which could disrupt the entire sector if one provider fails.