London Stock Exchange Group (LSEG) and Microsoft have announced a 10-year strategic partnership, aiming to empower the future of financial markets.
Microsoft estimates this partnership could help generate an additional $5billion in revenue for the company over the next 10 years. The total includes a $2.8billion minimum spend commitment from LSEG towards cloud services and support. The tech giant is to also purchase around a four per cent equity stake in LSEG through the acquisition of shares from the Blackstone/Thomson Reuters Consortium. Microsoft’s stake is worth around £1.5billion.
David Schwimmer, CEO of the London Stock Exchange Group, commented on the partnership with Microsoft. He said: “We are delighted to welcome Microsoft as a shareholder. LSEG believes 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 explained that the capital markets value chain has presented an increasing number of challenges to organisations across the space. A greater number of stricter regulations have come into play and traditional revenue sources have become more challenging.
This environment appears to have caused the partnership; as Microsoft and LSEG look to support a cloud and AI-led digital transformation approach.
Many organisations are operating with legacy platforms, siloed information, and limits on scalability: all factors hindering potential. These factors mean that companies are less able to deliver high-quality client experience, insights and tools. LSEG has begun to address these issues for its own customers, aiming for the 10-year partnership to accelerate its own transformation.
David Schwimmer also 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.”
Supporting the financial markets
Earlier this year, LSEG completed the acquisition of data services provider Refinitiv. LSEG used the acquisition to differentiate itself in the market with an end-to-end proposition across trading, execution, data and analytics solutions.
As part of the partnership, LSEG’s technology infrastructure and data and analytics platforms, are to move onto the Microsoft Cloud. The move includes Refinitiv platforms which power over 40,000 financial institutions in 190 countries.
Microsoft explained that the two companies plan to co-create an open all-in-one data, analytics, workflow and collaboration solution. The solution looks to reimagine client experiences for the first time.
The initial focus is to deliver interoperability between LSEG Workspace and Microsoft Teams, Excel and PowerPoint with other Microsoft applications. An updated version of LSEG’s Workspace, accessed entirely within the Microsoft 365 suite, is also to be added in the future.
Judson Althoff, EVP and chief commercial officer at Microsoft, spoke on the aims of the partnership. Althoff said: “Firstly, we believe that it requires a long-term strategic relationship to really digitise this industry. Second, we believe that it requires rich co-innovation and co-development to bring those solutions to life. Three, we believe in partnering with market leaders. LSEG is a leader in its space and we’re excited about the innovations we will be able to develop together.”
“The Microsoft Cloud is the most comprehensive and trusted cloud in the industry. It is also the cloud that helps customers do more with less. This is really important in uncertain times. The only pathway through uncertainty is continued and accelerated innovation. This is what we’re going to bring to bear with LSEG.”