LONDON/NEW YORK (Reuters) - London Stock Exchange Group Plc’s (LSE.L) planned purchase of Refinitiv in a $27 billion deal is the latest sign that exchange operators are focusing more on data products to increase revenue, while also trying to expand their global reach.
For more than a decade, exchange operators around the globe have been trying to consolidate. But proposed tie-ups between major competitors have failed several times in the past because of resistance from government authorities who either had antitrust concerns or did not want a foreign company running what was often seen as a national symbol.
At the same time, profits from the traditional business of facilitating transactions like stock trades have fallen, pushing the industry to look for related businesses for growth, analysts and industry sources said.
Because revenue from data products has been rising and is expected to continue doing so, exchanges are now hungry for these products as well as selling services based off that data and information, such as indexes and fee-based services they can offer once a trade has cleared.
“Data is the lifeblood of financial markets today now more than ever - and that data is getting more and more valuable,” said Kevin McPartland, head of market structure and technology research at Greenwich Associates.
If completed, LSE’s deal to buy Refinitiv, a global financial data analytics provider, from buyout firm Blackstone Group Inc (BX.N) and Thomson Reuters Corp (TRI.TO) will fit that mold, the analysts said.
“It just makes them more competitive and more appealing as a partner for customers because it brings together a lot
