Microsoft to acquire 4% stake in London Stock Exchange

13 Dec 2022 , 08:05 AM

As part of a 10-year business agreement to move the data platform of the exchange operator into the cloud, Microsoft will acquire a 4% equity investment in the London Stock Exchange Group, the British corporation announced on Monday.

It is the most recent illustration of the growing connections between a small group of major international cloud providers, including Microsoft, Google, Amazon, and IBM, and it has spurred regulators to examine the connections more carefully.

Microsoft has had relationships with LSEG for a while, but according to the exchange group’s CEO David Schwimmer, discussions regarding deeper connections started approximately a year ago.

“It’s a long-term collaboration. I anticipate that our clients will start to reap the rewards of the goods we will be developing together in 18 to 24 months, and we will then continue to build from there “Sprecher said to Reuters.

Regulators are concerned about the financial industry’s over-reliance on a small number of cloud service providers because of the potential industry-wide disruption that would result from a provider going offline.

A rule offering protections for cloud service providers in financial services has just been adopted by the European Union, and Britain is about to follow suit.

When questioned if LSEG had made sure regulators were on board, Schwimmer responded, “You should believe we do not like to surprise our regulators.

Instead of outsourcing tasks to the cloud to save money, the agreement focused on meaningful incremental revenue growth as new items gradually enter the market.

As a condition of the agreement, LSEG has agreed to spend a minimum of $2.8 billion with Microsoft on cloud-related services over the partnership’s duration.

Refinitiv was acquired by LSEG for $27 billion from a Blackstone and Thomson Reuters partnership, making the exchange the second-largest provider of financial data behind Bloomberg LP.

The closing of Microsoft’s acquisition is anticipated for the first quarter of 2023.

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