Tech Giant Microsoft invests $2 billion to take 4% stake in London Stock Exchange

U.S. tech giant Microsoft on Monday announced a 10-year partnership with the London Stock Exchange Group.

Microsoft will take a 4% stake in the London Stock Exchange’s corporate parent and provide cloud computer services for the financial markets company.

LSEG’s shares were up 4% in Europe on Monday.

The companies announced the partnership in a joint statement on Monday, touting the benefits it will deliver to the stock exchange’s customers through improved data and analytics.

In November, Google invested $1bn in Chicago-based CME as part of a 10-year cloud computing deal, while Nasdaq and Amazon Web Services agreed on a similar partnership last year.

Regulators have expressed concern about the over-reliance of financial firms on too few cloud providers, given the disruption this could cause if a provider serving many clients went down.

The deal will see various Microsoft products used across different parts of LSEG’s business. Microsoft will migrate the bourse’s data platform and other key tech infrastructure into its cloud built on Azure, the U.S. giant’s large public cloud product.

 Financial trading platforms were for a long time seen as being out of reach of cloud companies because of the high-speed requirements, but the string of new alliances underscores how that has changed as cloud capabilities have improved.

The European Union has just approved a law introducing safeguards on cloud providers in financial services, with Britain set to follow suit.

The release also said that Scott Guthrie, Microsoft’s executive vice president for the Cloud and AI Group, will be appointed as a non-executive director of LSEG.

LSEG completed its $27 billion acquisition of Refinitiv last year, making it the second-largest financial data company after Bloomberg. Its data and analytics business makes up two-thirds of group revenue.

Microsoft will buy its LSEG shares from Blackstone and Thomson Reuters (TRI). The purchase is expected to complete in the first quarter of 2023.

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