London Stock Exchange Group (LSEG) will migrate data infrastructure to Azure and spend a minimum of $2.8 billion on cloud services with Microsoft over the next decade under a sweeping new strategic partnership that will see Microsoft take a 4% equity stake in the group and install a non-executive director on its board.
The two said that they will "migrate LSEG’s data platform and other key technology infrastructure into the Microsoft Cloud" under the agreement. This will not include the exchange, LSEG confirmed to The Stack. Rather it will focus on data infrastructure and innovations around products like Refinitiv Workspace.
The $2.8 billion is already factored into LSEG’s existing projections for cloud or legacy opex and capex it will replace, the two said. They will "co-develop a new suite of solutions to give financial institutions much broader reach across sophisticated cross-asset, sustainable investment-aligned and non-traditional analytics."
The two will work to “architect LSEG’s data infrastructure using the Microsoft Cloud, and to jointly develop new products and services for data and analytics” they said today. David Schwimmer, CEO of LSEG, added: “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.
The two will also modernise Refinitive Workspace (a financial news, data and analytics platform) to create an "all-in-one data, analytics, workflow, and collaboration solution, specifically designed to help finance and investment professionals improve communications and productivity while maintaining regulatory compliance."
This will let users collaborate with "other LSEG customers inside and outside of their organisations, using Teams to connect, chat, call, and meet with built-in compliance, security, and privacy [and] work seamlessly between LSEG Workspace, Teams and Microsoft 365 tools to deliver financial presentations and reports."
The unusual move by Microsoft to take a significant ownership interest in a major exchange comes as LSEG saw revenues from data and analytics surge in the first half of 2022, with revenues for that segment up £482 million to £2.5 billion. LSEG supplies services to almost all of the top 100 global banks and three-quarters of the top 100 asset managers by total assets. It has over 40,000 customers worldwide and operates systemically important global infrastructure, but lost its spot as Europe’s most valuable exchange to Paris this year.
Microsoft and LSEG will use Azure Synapse and Purview (a data analytics and governance offering) to create a cloud-based data architecture that consolidates LSEG datasets onto "one, flexible infrastructure."
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The large cloud providers have been signing increasingly far-reaching commercial agreements with large clients that extend far beyond paying for services: AWS for example has signed deals with BP that involve providing renewable energy to its data centres, with Atos that involve it investing in the outsourcer’s data centres.
The agreement comes amid ongoing digital transformation at LSEG which this year moved its primary trading infrastructure from its Liverpool Street site in the City of London to a new data centre in London’s Docklands.
Microsoft Chairman and CEO Satya Nadella added: “Advances in the cloud and AI will fundamentally transform how financial institutions research, interact, and transact across asset classes…”
“London Stock Exchange Group with the trust and breadth of the Microsoft Cloud — spanning Azure, AI, and Teams — [will] 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.”
Microsoft and LSEG partnership: Interoperability coming
Under the new Microsoft and LSEG partnership, the stock exchange operator will move its data platform and other key technology infrastructure onto Azure. Workspace, LSEG’s data and analytics workflow platform, meanwhile “will become interoperable with certain Microsoft applications” the two said without further detail.
Microsoft SVP Scott Guthrie will also take a seat on the board of LSEG as a non-executive director.
They also plan to “introduce innovative new cloud-based analytics services” and “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.”