Microsoft to acquire a 4% stake in the London Stock Exchange in a deal valued at $2 billion

In the latest sign that boundaries between Big Tech and financial firms continue to blur, Microsoft is investing $2 billion in the London Stock Exchange in exchange for a 4% stock in the firm, which further strengthens their longstanding relationship.

In an announcement on Monday, the London Stock Exchange Group (LSEG) the deal would bring a “meaningful” upside to its revenues after 2025. LSEG said the deal will help it sell more of its existing products via Microsoft apps while broadening its customer base, along with better pricing of products, Reuters reported, adding that the firm declined to give any specific estimates.

Meanwhile, the deepening ties between cloud companies and financial institutions including banks and stock exchanges have raised some concerns among government regulators and prompted them to scrutinize the connection more closely. To keep close eyes on blurring lines between tech companies and exchanges, the European Union recently approved a law that provides safeguards for cloud providers in financial services. Great Britain is about to announce a similar measure.

In a statement, LSEG CEO David Schwimmer told Reuters: “It’s a long-term partnership. In terms of the products we will be building together, I would expect our customers to start to see the benefits of that 18 to 24 months out and we will continue building from there.”

When asked if LSEG has ensured that regulators were on board with the deal, Schwimmer said: “You should assume we do not like to surprise our regulators. We will continue to maintain our multi-cloud strategy and work with other cloud providers.”

Meanwhile, Microsoft is not the only tech giant investing in exchanges.  In November 2021, we wrote about Google after the search giant invested $1 billion in CME Group in a deal to move CME’s futures exchange trading systems to the cloud and transform the global derivatives market. During the same month, Amazon and U.S. exchange Nasdaq also announced a similar multi-year partnership.

Microsoft’s $2 billion purchase is expected to complete in the first quarter of 2023, Reuters reported.