HE LONDON Stock Exchange Group made a major step towards the digital world today, signing a 10-year commercial deal with Microsoft which also takes a 4% stake in a business that goes back to 1801.
While the LSE is best known as a trading platform for shares, its data and analytics business Refinitiv, bought in 2021 for $27 billion is what has attracted the tech giant founded by Bill Gates.
The exchange will spend $2.8 billion over the next 10 years to buy cloud space from Microsoft.
The pair will then co-invest to develop data modeling and cloud products that should hugely improve the quality of the information available to investors.
There is a hope the deal with “democratise” share trading, with information previously only seen by large fund managers becoming available to smaller investors.
Microsoft is buying the 4% stake from the Blackstone/Thomson Reuters Consortium.
LSEG shares today jumped 284p to 7690p, which values the business at £37 billion.
David Schwimmer, the former Goldman Sachs man brought in to modernize the business, 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.”
Satya Nadella, Chairman and CEO, Microsoft, 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.”
There will be inevitable speculation that in time Microsoft could raise its stake or perhaps even launch a full bid.
The LSE has attempted to merge with other stock markets several times over the years in an attempt to become a global business.
A merger with Deutsche Bourse in 2000 collapsed. Bids from Nasdaq in 2005 and 2006 also failed. Either of those deals would have led to an overhaul of LSE’s tech systems, something Microsoft will now be charged with doing.
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