Microsoft has taken a £1.5billion stake in the London Stock Exchange Group.

The Telegraph describes it as a "stunning" approach by the US tech giant for one of the world's oldest financial institutions.

The LSE was founded in 1801, but has a history dating back to London's original coffeehouse brokers in the 1700s.

The investment, part of a 10-year deal which will see the bourse using Microsoft's internet "cloud" technology, gives the US company a 4% stake in the British business.

The American giant is buying shares from a consortium made up of Thomson Reuters and Blackstone, which took a stake in the LSE after selling data company Refinitiv to the UK-listed exchange for £21billion at the start of last year.

The acquisition of Refinitiv, under boss David Schwimmer, was a move to transform the financial group from a company that made revenues out of company share trades and listings into an international data and information giant.

Failed merger

The Microsoft investment comes after the LSE failed, on a third attempt, to secure a blockbuster merger with German rival Deutsche Borse in 2017. The deal also represents one of the UK's biggest ever "cloud" contracts in the UK's private sector.

The Microsoft deal will see LSE spend a minimum of £2.3billion over the next decade on a digital makeover using the US giant's technology, including its Azure data storage product, its Teams communication tools and integrating artificial intelligence (AI) into its products.

It is one of the biggest interventions by a tech giant in financial markets.

While Apple and Google both offer consumer products, such as mobile payment services, neither has taken on a comparable strategic stake in a bourse.

The investment also follows an announcement from the Financial Conduct Authority in October, which said it would investigate the influence of big tech companies on the financial services sector.

Telecoms regulator Ofcom is also reviewing the dominance of Microsoft, Amazon and Google in the UK internet services, or cloud, market.

LSE spending

The LSE said it would spend £250million to £300million between 2023 and 2025 on the new contract.

The exchange's chief executive, Mr Schwimmer, told the Telegraph: "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, Microsoft's chief executive and chairman, added: "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."

Microsoft executive vice-president Scott Guthrie will join the LSE's board. The tech giant said it expected the LSE and other financial services deals resulting from the contract to drive $5billion (£4billion) in revenues for it.

Bill Borden, Microsoft's head of financial services, said the deal is intended to create a joint marketplace where LSE Group customers use Microsoft's cloud computing products together with existing data from Refinitiv.

FTSE 100

The UK's top share index, the FTSE 100, was up three points at 7,448 shortly after opening this morning, following yesterday's 30-point loss.

Brent crude futures were 1.68% higher at $79.24 a barrel.

Companies reporting today

Full-year results:

  • Chemring Group

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