In the last 18 months, a number of tie-ups between major exchanges and hyperscale cloud providers have been announced. In November 2021, the news of CME’s $1bn investment and 10-year strategic partnership with Google was quickly followed by Nasdaq’s partnership with AWS to build a cloud-enabled capital markets infrastructure. More recently, London Stock Exchange Group (LSEG) and Microsoft entered into a 10-year strategic partnership, with Microsoft taking a 4% stake in LSEG.
In this interview with TradingTech Insight, Debbie Lawrence, Group Head of Data Strategy and Management at LSEG, sheds light on the reasons for the new partnership with Microsoft, and outlines some of the Group’s plans.
First of all, what advantages does Microsoft offer LSEG and its customers over other cloud providers such as Amazon AWS and Google Cloud Platform (GCP) and why was it seen to be the best fit?
“There are multiple pillars to our engagement with Microsoft,” says Lawrence. “And this isn’t just a cloud deal. If it was, we could have probably done it with any of the other providers. But what Microsoft has that none of the other providers have, is Microsoft 365 and all the productivity tools that sit within that.”This is an important point because Microsoft’s software, particularly Excel, has become deeply embedded in many financial institutions, performing a vast range of tasks including data analysis, financial modelling, forecasting, reporting and visualisation. Under the partnership, these applications will become interoperable with Workspace, LSEG’s next-generation data and analytics workflow solution.
“There’s a huge amount of excitement around the interoperability aspect,” says Lawrence. “We all know how frustrating it is in any data environment where you have to sign on to multiple applications. The vision is to have a single sign-on capability where a client turns on a computer and is suddenly in the Microsoft 365 suite, but also in the LSEG data environment, with interoperability enabling the user to move in and out of the applications that suit them, whether that’s Teams or Power BI or Excel, and then back into Refinitiv/LSEG instances.”
Desktop interoperability is just one aspect, she adds. “The human use cases, where people are actually using the data on a day-to-day basis, is the largest driver for why we partnered with Microsoft versus one of the other cloud providers. But equally, Microsoft has a whole suite of other tools that are incredibly exciting for us as we look to build out our data platform and analytics capabilities on things like Trident and Purview. The ability that the partnership gives us to co-create is incredibly exciting for us.”
Lawrence is keen to point out however that the partnership with Microsoft does not preclude LSEG from working with other cloud platforms.
“We’ve made it quite clear that we will continue with our multi-cloud strategy, because some cloud providers are better than others in certain things. Google has some specific USPs that we really like so we will continue to partner with them, as we will with Amazon, and I imagine over time probably with other cloud providers,” she suggests. “So this is not in any way exclusive.”
Data consistency and agility
Migrating its data architecture to a Microsoft platform that use Azure Purview and Azure Synapse will allow LSEG to overcome fragmented data infrastructures, streamline data consumption, standardise data models, expedite onboarding of new data sources, and meet the growing demand for alternative data, explains Lawrence.
“One of the challenges that we’ve been dealing with is that we have several units that have grown both organically and through acquisitions,” she says. “As a result, the infrastructure that supports our data distribution is fragmented. And the client consumption of that data is inconsistent, which drives a fair amount of cost on their side to do the appropriate mapping and to deal with inconsistencies around terms and conditions for different data and different products. That’s been a longstanding frustration both for our clients and ourselves.”
Azure will provide LSEG with a centralised and scalable platform to manage, store, and process large volumes of data across different sources, making it easier to maintain and access information. Clients will also benefit from more consistent and efficient access to data, as standardised data delivery will enable them to consume information in a more uniform manner, thus reducing the complexity associated with accessing data from multiple sources or formats.
Agility around onboarding of new data sources is also a key factor, says Lawrence. “Today, if we want to distribute or onboard new data and make it available to all of our products, there’s a fairly long lead time because it’s got to go through so many hops,” she says. “Investment in the data platform is about not just simplifying our infrastructure, but also delivering that agility to the client so that we can turn around requirements far more quickly than we can today.”
The cloud migration will also help LSEG deliver new, alternative data sets, which are increasingly sought after by its clients. “We can barely keep up with the demand for data at the moment, which is just insatiable and surpasses what I would call the traditional market data space,” says Lawrence. “There are expectations that we onboard alternative data much faster, for example. If you look at the analytics space and the model consumption, there’s a need to onboard data and discard it really quickly. The data platform has to enable that agility in the system because the financial markets are moving so fast. This investment is going to be critical for being able to meet that use case.”
By combining Azure Machine Learning with LSEG’s analytics and modelling expertise, the partnership aims to create a new and innovative suite of solutions that will provide clients with access to a wider range of sophisticated analytics, spanning across various asset classes, sustainable investment alignment, and non-traditional analytics domains.
“The analytics initiatives will provide capabilities such as Analytics-as-a-Service and Models-as-a-Service, rather than the client taking the data into their systems and running their models and analytics on their infrastructure,” says Lawrence. “We’ll be providing the capability to do it all within our environment. It would still be their IP of course, but run on our infrastructure and using the combination of our skill set with the Microsoft AI technology. And who knows where the world of AI is going? There are new players in this market all the time.”
In terms of modelling, the partnership will concentrate on model creation, validation, diagnostics, and deployment, explains Lawrence, adding that this approach will assist banks and investment firms in bypassing the time-consuming and costly task of building models from scratch, and will be integrated with the LSEG data platform and Microsoft 365, and accessible via both Workspace and APIs.
Real-time data and matching engines
Are there plans within the partnership to distribute LSEG’s real-time market data via the cloud, or to move its matching engines to a cloud environment?
“At the moment, the partnership with Microsoft is primarily in what I would describe as the ‘non-real time data’ space,” says Lawrence. “But there’s an element of it being ‘near real time’, with things like company reports, for example. Time will tell whether cloud is going to be able to replace what sits in our low latency network and infrastructure around the world.”
She continues: “When the war began between Russia and Ukraine, we had 320 billion ticks on our Elektron system. That isn’t something that we’ve even started to look at putting on the cloud. However, the ‘exhaust’ of that – the historical time series data, the terms and conditions, the reference data that underpins that market data – is 100% in scope of what we’re doing. Ultimately that’s where the interoperability and the linking of the data using things like PermID is critical, to be able to reduce that total cost of ownership to our clients.”
Currently, the partnership does not include any definitive plans to migrate LSEG’s various matching engines from its existing data centres to the cloud.
“We’re now working through exactly what the next time horizons look like,” concludes Lawrence. “We’re all big advocates of not going to market too soon because we want to be confident in the timelines and the delivery. But I would imagine over the next few months, we’ll move from sales mode into proper execution mode. Then you will start to see announcements in the market as to where we’re going to be focusing first and what’s going to be made available over the next 12 to 18 months’ horizon.”
The industry will no doubt be closely watching how the partnership develops.
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