The Price of Everything
On a Wednesday morning in late July 2019, David Schwimmer — not the actor, the former Goldman Sachs banker who had been running London Stock Exchange Group for barely a year — placed a phone call to Tom Glocer, the former CEO of Thomson Reuters. The subject was not pleasantries. Schwimmer was about to make the most consequential acquisition in the history of European financial market infrastructure: a $27 billion all-share deal for Refinitiv, the financial data and analytics business that Blackstone had carved out of Thomson Reuters just seventeen months earlier. The deal would transform LSEG from a midsized exchange operator — admired, profitable, but fundamentally constrained by the economics of trading and clearing — into one of the world's largest financial data companies, a direct competitor to Bloomberg and S&P Global. It was audacious. It was enormous. And it was, by almost every conventional measure, insane.
The stock market said so. LSEG shares dropped more than 5% the day the deal was announced. Analysts questioned the price, the integration complexity, the cultural gulf between a 300-year-old British exchange and a sprawling data operation stitched together from the carcasses of Reuters, Tradeweb, and a half-dozen other acquisitions. One sell-side note called it "a leap of faith disguised as strategic logic." But Schwimmer — cerebral, disciplined, with a banker's instinct for transformational moments — had seen something the market hadn't priced. He understood that the future of financial infrastructure was not in matching buyers and sellers on a trading floor, or even in the clearing and settlement plumbing that LSEG had spent a decade building. The future was in data. In indices. In analytics. In the quiet, recurring, high-margin revenue streams that compound invisibly while everyone watches the exchange ticker.
Four years later, LSEG would report total income of £8.4 billion, with nearly 70% flowing from data and analytics — a business that barely existed on its balance sheet before the Refinitiv deal closed. Its market capitalization would surpass £55 billion, placing it among the most valuable financial companies in Europe. The leap of faith had landed.
But the story of London Stock Exchange Group is not simply the story of one transformational deal. It is the story of how a venerable institution — one that traces its origins to a coffeehouse in
Change Alley where merchants gathered to trade shares of joint-stock companies in the late seventeenth century — systematically reinvented itself across three centuries, shedding skin after skin, mutating from a physical marketplace into a digital clearinghouse into a data empire. It is the story of a company that understood, earlier and more ruthlessly than most, that the value in financial markets was migrating from transactions to information — and that the owner of the pipes could, with sufficient ambition, become the owner of the water flowing through them.
By the Numbers
London Stock Exchange Group
£8.4BTotal income (FY2024)
£55B+Market capitalization (mid-2025)
~70%Revenue from Data & Analytics
190+Countries served
$27BRefinitiv acquisition value (2019)
25,000+Employees worldwide
40,000+Customer institutions
328 yearsSince Jonathan's Coffee House (1698)
Coffeehouse to Colossus
The origin myth is irresistible. In 1698, a broker named John Castaing began posting the prices of stocks and commodities on the wall of Jonathan's Coffee House in the City of London. There was no exchange, no clearing mechanism, no regulatory framework — just a handwritten list, a room full of merchants, and the oldest technology in finance: trust, mediated by proximity. By 1801, the brokers had formalized their arrangement into the London Stock Exchange, a members-only institution that would become the gravitational center of global capital for the next century and a half.
The physical exchange — the trading floor, the open-outcry pit, the spectacle of men in colored jackets shouting across a room — persisted in London longer than in most markets. Electronic trading arrived in 1986 with the "Big Bang" deregulation under
Margaret Thatcher, which dismantled the fixed commission structure, abolished the distinction between jobbers and brokers, and opened the exchange to foreign firms. The trading floor closed permanently in 1986. It was, in hindsight, the first death and resurrection — the first time LSEG shed an identity that seemed essential and emerged as something larger.
The institution mutualized, demutualized, then listed its own shares in 2001 — an exchange listing itself on itself, a recursion that delighted financial philosophers and troubled no one at the time. The IPO valued the company at approximately £1.4 billion, a modest sum for an institution that facilitated the trading of trillions. But the listing did something crucial: it gave LSEG a publicly traded currency with which to acquire, a strategic flexibility that the private exchange model had permanently foreclosed.
The Clearing Thesis
The decade between 2007 and 2017 was defined by a single strategic conviction: that post-trade infrastructure — clearing, settlement, risk management — would become more valuable than trading itself.
Clara Furse, who led LSEG from 2001 to 2009, navigated the company through multiple hostile takeover attempts — Macquarie Group in 2005, NASDAQ in 2006, a brief flirtation with a Deutsche Börse merger — emerging each time with the company's independence intact but its strategic ambitions sharpened. Furse, a former derivatives broker with an instinct for institutional defense, understood that LSEG's value as a standalone entity depended on building businesses that transcended the exchange itself. The critical acquisition came in 2007, when LSEG paid €1.6 billion for Borsa Italiana, including its jewel: Cassa di Compensazione e Garanzia (CC&G), the Italian central counterparty. Suddenly LSEG was not just a marketplace; it was a clearinghouse.
Xavier Rolet took the helm in 2009 and accelerated the clearing thesis with an almost single-minded intensity. A French-born, Goldman-trained dealmaker who oscillated between patrician charm and combative urgency, Rolet saw the post-2008 regulatory landscape — mandatory clearing for OTC derivatives under Dodd-Frank and EMIR, rising capital requirements for bilateral exposures — as a once-in-a-generation structural gift to central counterparties. In 2013, LSEG acquired the remaining 50% of LCH.Clearnet it didn't already own for approximately €510 million, gaining full control of the world's largest interest rate swap clearing operation. LCH cleared over $1 trillion in notional value daily. The economics were beautiful: clearing fees were thin individually but enormous in aggregate, the switching costs for participants were effectively infinite (you don't migrate your interest rate swap portfolio on a whim), and the regulatory mandate ensured a captive, expanding customer base.
We are building a multi-asset class, open-access infrastructure that serves global markets. The exchange is a piece of it. Clearing is the backbone.
By 2018, LCH accounted for roughly 95% of the cleared interest rate swap market — a near-monopoly sustained by network effects so dense that even regulators, who nominally favored competition, acknowledged the systemic efficiency of concentration. The clearing business generated margins that exchange trading, with its relentless fee compression and high-frequency fragmentation, could no longer sustain.
But Rolet also understood the limits of the clearing thesis. Post-trade infrastructure was magnificently profitable and wonderfully defensible, but it grew at the rate of global derivatives volumes — mid-single digits in good years, flat in bad ones. The clearing moat protected the franchise. It didn't transform it.
The Refinitiv Bet
David Schwimmer arrived at LSEG in August 2018, succeeding Rolet after a messy departure that involved board politics, an anonymous letter, and a level of public acrimony unusual for a City institution. Schwimmer's appointment surprised many — he had no exchange experience, having spent his entire career at Goldman Sachs, most recently running the bank's investment banking division in Asia-Pacific. He was reserved where Rolet was theatrical, deliberate where Rolet was impulsive. He also had a banker's appreciation for transformational scale.
The Refinitiv opportunity materialized with unusual speed. In October 2018, Blackstone had closed its acquisition of a 55% stake in Thomson Reuters' Financial & Risk business for approximately $20 billion, renaming it Refinitiv. The thesis was classic private equity: cut costs, rationalize products, improve margins, and exit at a premium. Blackstone had barely begun the operational work when Schwimmer came calling.
The strategic logic was, on paper, compelling. Refinitiv owned the Eikon terminal platform (Bloomberg's perennial runner-up, with roughly 75,000 installed screens versus Bloomberg's 325,000), the FTSE Russell index business (which LSEG already partially owned through a 2014 acquisition of the Frank Russell Company), the Tradeweb electronic trading platform, and an enormous data licensing operation that fed analytics into the workflows of banks, asset managers, and corporations worldwide. The combined entity would have roughly $6 billion in data and analytics revenue — placing it in the same league as Bloomberg's estimated $12 billion and S&P Global's $8 billion.
Key terms of LSEG's transformational acquisition
Oct 2018Blackstone acquires 55% of Thomson Reuters' Financial & Risk for ~$20B, rebrands as Refinitiv
Jul 2019LSEG announces $27B all-share acquisition of Refinitiv
Jan 2021Deal closes after regulatory approvals; LSEG divests Borsa Italiana to Euronext for €4.3B as EU condition
Nov 2021Thomson Reuters sells $3.3B of its LSEG stake; retains ~15%
2023Microsoft partnership announced; $10B cloud migration deal over 10 years
The price was extraordinary — $27 billion in LSEG shares, representing a roughly 18x EBITDA multiple for a business that, in Thomson Reuters' hands, had been growing at low-single digits and losing market share to Bloomberg. But the multiple reflected something beyond Refinitiv's standalone trajectory. It reflected the compounding potential of combining Refinitiv's data assets with LSEG's indices, clearing data, and regulatory analytics — and the belief that integration, executed well, could unlock cross-selling and margin expansion that neither entity could achieve alone.
Regulators imposed their toll. The European Commission required LSEG to divest Borsa Italiana, the very asset that had launched the clearing strategy a decade earlier. Euronext paid €4.3 billion — a handsome return on the original €1.6 billion, but the loss of the Italian exchange stung symbolically. It was the price of metamorphosis: to become a data company, LSEG had to sacrifice a piece of its exchange identity.
The deal closed in January 2021. The integration would consume the next four years, involving the migration of 40,000 customer institutions onto unified platforms, the rationalization of overlapping data products, and the construction of an entirely new technology stack. It remains, by any reasonable measure, the largest and most complex integration in the history of European financial infrastructure.
The Microsoft Alliance
If the Refinitiv acquisition was the strategic bet, the Microsoft partnership was the execution accelerant. Announced in December 2022, the deal gave Microsoft a roughly 4% equity stake in LSEG (acquired from a consortium of Refinitiv-era shareholders for approximately $2 billion) and established a ten-year strategic partnership with three interlocking objectives: migrating LSEG's infrastructure to Microsoft Azure, embedding Refinitiv data into Microsoft Teams and Office 365, and co-developing AI-powered analytics using Azure OpenAI services.
The partnership was not a typical enterprise cloud deal. It was a distribution play of unusual ambition. LSEG's data — real-time pricing, reference data, regulatory filings, ESG metrics, news feeds — would be surfaced natively inside the productivity tools used by millions of financial professionals daily. A portfolio manager reading email in Outlook could pull up real-time Refinitiv pricing data without leaving the application. An analyst building a model in Excel could access FTSE Russell index constituents through a native integration. The thesis: that data embedded in workflow captures more value than data accessed through a dedicated terminal, because it reduces friction to zero.
This partnership fundamentally changes how financial data is consumed. We are moving from a world where professionals go to a terminal to a world where the data comes to them.
For Microsoft, the deal was a beachhead into financial services — a sector that had proved stubbornly resistant to cloud migration due to regulatory complexity and data sensitivity. For LSEG, it was an answer to the existential question that haunted every Refinitiv competitor: how do you compete with Bloomberg's 325,000 terminals when you have 75,000? You don't compete on terminals at all. You compete on ubiquity.
The financial terms were revealing. Microsoft committed to consuming $5 billion in LSEG cloud services over the partnership's life, while LSEG committed to spending approximately $2.8 billion on Azure infrastructure. The net economics were favorable to LSEG, but the real value lay in the distribution — access to Microsoft's 400 million+ commercial Office users as a potential data consumption surface.
The Index Business: Quiet Power
Lost in the spectacle of Refinitiv and the Microsoft deal is the business that may ultimately prove most valuable: FTSE Russell.
LSEG's index operation traces to two acquisitions — the Frank Russell Company in 2014 (for approximately $2.7 billion) and the full integration with FTSE International, which LSEG had acquired earlier. The combined FTSE Russell franchise operates roughly 350,000 indices tracking assets worth an estimated $15 trillion — including the FTSE 100, the Russell 2000, and a growing suite of ESG, thematic, and fixed-income benchmarks.
Index businesses are the closest thing in finance to a toll road. Asset managers who benchmark to an index — or who create passive products tracking an index — pay an annual licensing fee based on assets under management. The fee is tiny in percentage terms (typically 1–3 basis points) but applied to trillions in tracked assets, the aggregate is enormous. And the economics are almost entirely marginal cost: creating a new index costs essentially nothing beyond the intellectual effort of defining its methodology. Maintaining it is automated. The gross margins approach 85%.
The structural tailwind is passive investing. Every dollar that migrates from active management to passive vehicles — ETFs, index funds, smart beta — increases the royalties flowing to index providers. BlackRock's iShares, Vanguard's ETFs, State Street's SPDRs: all pay licensing fees to index operators for the privilege of tracking their benchmarks. The AUM of global passive equity strategies surpassed $15 trillion in 2024, and the migration continues. FTSE Russell is the third-largest index provider globally after S&P Dow Jones Indices and MSCI, and it is gaining share in fixed income and ESG indexing, where the competitive moats are still being dug.
The index business also creates a data flywheel. Index construction requires data — pricing, corporate actions, ESG scores, fundamentals. LSEG supplies much of this data internally through Refinitiv. And index analytics — factor models, attribution tools, risk decomposition — feed back into the data and analytics subscription revenue. The circularity is intentional.
The Clearing Fortress
LCH remains the structural foundation — the granite beneath the glass tower. As of 2024, LCH.SwapClear processes more than 90% of the global cleared interest rate swap market, a concentration that borders on natural monopoly. The clearing business generates lower margins than data and analytics but provides something equally important: systemic entrenchment.
Central counterparties occupy a unique position in financial regulation. They are simultaneously private businesses and quasi-public utilities — profit-seeking entities that regulators deem too important to fail, too complex to replace, and too interconnected to ignore. LCH's default fund, capitalized by its clearing members (the world's largest banks), creates a mutualized risk pool that aligns the incentives of participants with the stability of the clearinghouse. The switching costs are not merely economic; they are regulatory. Migrating a bank's cleared swap portfolio from LCH to a competitor would require months of negotiation, regulatory approval, and operational risk that no chief risk officer would willingly accept.
The post-Brexit battle over euro-denominated clearing — with the European Commission pressuring EU banks to move clearing activity from London to EU-based clearinghouses — has consumed enormous diplomatic and regulatory energy since 2016. Yet as of mid-2025, the overwhelming majority of euro interest rate swap clearing remains at LCH in London. The network effects proved more powerful than political will. Brussels extended temporary equivalence permissions, tacitly acknowledging that fragmenting clearing would increase systemic risk rather than reduce it.
The migration of euro-denominated clearing from UK CCPs remains a long-term objective, but the systemic risks of a forced rapid transition are significant and must be carefully managed.
The Integration Machine
By late 2024, LSEG was three years into the Refinitiv integration — and the results, measured against the skepticism that greeted the deal, were striking. Annual cost synergies had reached approximately £400 million, ahead of the original target. Revenue synergies, always the harder promise, were materializing through cross-selling: Refinitiv data embedded in FTSE Russell products, LCH clearing data packaged as analytics, and the Microsoft distribution channel opening access to customer segments that Refinitiv had never reached as a standalone business.
The technology migration was the harder challenge. Refinitiv's infrastructure was a geological formation — layers of systems acquired over decades, each with its own data architecture, authentication protocols, and customer interfaces. The Eikon platform, while functional, had accumulated technical debt that made it brittle and expensive to maintain. LSEG committed to a multi-year cloud migration, rebuilding the platform on Microsoft Azure with a modern microservices architecture that would allow modular updates, real-time data delivery, and AI integration.
This was not merely a technology project. It was a cultural integration — merging LSEG's exchange-operator discipline (regulated, risk-averse, operationally precise) with Refinitiv's data-company ethos (iterative, product-driven, comfortable with ambiguity). The friction was real. Employees from the exchange side complained about the data division's tolerance for imperfection; data division staff chafed at the exchange side's procedural rigor. Schwimmer's approach was characteristically methodical: unified management structures, shared P&L accountability, and a relentless focus on customer outcomes rather than internal politics.
The Workspace platform — LSEG's next-generation replacement for both Eikon and the legacy Reuters desktop — began rolling out to customers in 2023. Early adoption metrics were encouraging but far from decisive. The question that will define the next five years is whether Workspace can gain terminal share against Bloomberg, which remains the default operating system of global finance, the platform so embedded in workflow that many traders cannot imagine life without it. LSEG does not need to kill Bloomberg. It needs to prove that a cloud-native, AI-enhanced, Microsoft-integrated data platform can capture the next generation of financial professionals — the ones who never knew Reuters, never sat in front of an Eikon screen, and whose workflow begins in Teams rather than on a dedicated terminal.
The AI Pivot
In 2024, LSEG began repositioning itself as an AI-native financial data company — a narrative shift that, depending on one's level of skepticism, either reflects genuine strategic foresight or opportunistic buzzword adoption. The reality, as usual, lies somewhere between.
The partnership with Microsoft provides the infrastructure: Azure OpenAI services, large language model access, and the compute capacity to process LSEG's vast data estate. The early applications are practical rather than spectacular — AI-powered search across Refinitiv's document archives, automated summarization of regulatory filings, natural language interfaces for data queries, and enhanced entity recognition in news feeds. None of this is frontier AI research. All of it reduces friction for customers.
The more ambitious play is in analytics. LSEG's data estate — decades of pricing history, corporate actions, ownership records, ESG assessments, regulatory filings, and news — constitutes one of the richest training corpora for financial AI applications in the world. The hypothesis is that AI models trained on this data can generate proprietary analytics (risk scores, sentiment indicators, flow predictions) that become the next layer of the data subscription — a layer that justifies higher pricing and deeper customer lock-in.
The risk, of course, is that AI commoditizes data rather than premiumizing it. If large language models can extract insight from raw data at marginal cost, the value may shift from the data provider to the model provider — from LSEG to OpenAI, Anthropic, or Google DeepMind. LSEG's bet is that proprietary data, combined with domain-specific model fine-tuning, creates defensibility that generic AI cannot replicate. The bet is reasonable. It is not certain.
The Long Game of Capital Markets Infrastructure
Stand back far enough and the pattern is unmistakable. Every generation of LSEG leadership has identified the next layer of value in financial markets and repositioned the company to capture it — from physical exchange to electronic trading (1986), from trading to clearing (2007–2013), from clearing to data (2019–present). Each transition required sacrificing a piece of the previous identity: the trading floor, Borsa Italiana, the self-image as a British exchange rather than a global data company. Each transition was met with skepticism that, in retrospect, underestimated the speed at which value migrates in financial infrastructure.
The current transition — from data provider to AI-enabled analytics platform — is the most ambitious and the most uncertain. Unlike clearing, which benefited from regulatory mandate, or index licensing, which rides the passive investing wave, AI-enabled analytics must compete for wallet share against Bloomberg's formidable product organization, S&P Global's data breadth, and a generation of fintech startups that are AI-native from day one. The structural advantage is the data estate. The structural risk is execution.
Schwimmer, now seven years into his tenure, has built the machine. The question is whether it runs.
We have completed the most transformational period in our company's history. The next chapter is about realizing the full potential of what we have built.
An Exchange That Isn't
Here is the paradox that defines London Stock Exchange Group in 2025: it is named after a stock exchange, and the stock exchange — the actual matching engine where shares of BP and Unilever trade — accounts for less than 5% of its revenue. The exchange is a rounding error. It is also the brand. The name "London Stock Exchange" carries three centuries of institutional credibility, a resonance that data licensing alone could never manufacture. The exchange lends legitimacy. The data generates profit.
Walk through LSEG's offices near St Paul's Cathedral and you will not find the frantic energy of a trading floor. You will find engineers building APIs, data scientists training models, product managers designing analytics dashboards, and sales teams pitching cloud-delivered data workflows to institutional clients in Singapore, São Paulo, and Chicago. The coffeehouse in Change Alley has become a cloud computing operation. The handwritten list on the wall has become a data lake spanning petabytes.
And somewhere in that data lake, refreshed in real time, is the price of LSEG's own shares — trading on its own exchange, valued by its own indices, cleared through its own clearinghouse, analyzed by its own analytics platform. The recursion is complete. The exchange has eaten itself and become something else entirely.
On LSEG's screens, the closing price flickers: £114.80, up 0.7% on the day. A number posted on a wall.
