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The London Stock Exchange has said its recent partnership with Microsoft will help transform its business in the face of an ongoing rut in the stock markets.
Microsoft took a 4% stake in LSEG and announced a 10-year deal for cloud and data services in December. Speaking to journalists after the release of the exchange’s full-year results on March 2, David Schwimmer, CEO of LSEG, said the deal helps the company refocus on data services and away from struggling capital markets.
Microsoft is a key partner in this transformation, supporting our data platform, workspace and analytics initiatives, as well as our broader technical infrastructure, he said.
Equities represent an increasingly smaller part of LSEG’s turnover, according to the results published on March 2.
The group reported a pre-tax profit of 1.2 billion for 2022, an increase of almost 40% over the previous year. But the capital markets division only grew 10% and equity income only increased 3%. Most of the revenue growth in the capital markets division came from the fixed income and derivatives trading platform, Tradeweb.
The London Stock Exchange is a big part of our business, but it’s less than 3% to 4% of our total revenue, Schwimmer said.
While stock trading volumes increased slightly, 2022 turned out to be a disappointing year for IPOs on the exchange. Compared to a record year of 2021, capital raised through new issues fell by almost 70% to 10.7 billion.
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As the city remains under pressure for its attractiveness as a listing location, Irish construction giant CRH announced on March 2 that it planned to move its primary listing from London to New York.
LSEG now wants to focus more on its data analytics and post-trade business, following four acquisitions in 2022: Global Data, MayStreet, Tora and Quantile.
Those acquisitions really help position us to serve our customers in the cleared and vacated space, Schwimmer said.
Anna Manz, chief financial officer, said LSEG realized approximately $300 million in cost savings from the acquisition of Refinitiv.
Schwimmer added that LCH, the group’s clearing house, cleared more than $1.1 trillion in currency and interest rate swaps last year and that LCH’s market share in interest rate swaps remained above 90%.
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