LSEG, Symphony vie to build a ‘LinkedIn’ for capital markets

Six months after London Stock Exchange Group (LSEG) became the latest exchange provider to partner with Big Tech through its 10-year deal with Microsoft, it has indicated the potential endgame of this partnership: becoming a trusted directory for the financial services industry.

It isn’t alone in its endeavor. Companies such as chat and collaboration platform Symphony have been attempting to ‘reinvent the phonebook’ since its second and current CEO, Brad Levy, began adding new features including identity management and know-your-customer capabilities to its offering.

The most apt comparison to make is that these companies are looking to build a platform that’s functionally similar to LinkedIn—a directory of professional users. While LSEG and Symphony have chafed at the suggestion of operating a social media platform, social media has inspired and informed both of their plays.

The combination of Microsoft’s technology and tooling combined with LSEG’s industry stature promises a solid bedrock upon which to build a service intended for adoption by the whole industry. Integrating LSEG’s Workspace platform—first developed by Refinitiv, which LSEG acquired in 2020 and closed at the start of 2021—with Microsoft’s Office suite, for example, could optimize client workflows by slashing the amount of copying-and-pasting between applications, Holden Sibley, head of strategy for LSEG’s trading and banking solutions business, tells WatersTechnology.

Sibley has been involved with the exchange’s strategic partnerships, mergers, and acquisitions for two-and-a-half years. Perhaps unsurprisingly, the Microsoft deal is the partnership that occupies most of his time. In his view, every day, almost every financial participant under the sun lives and breathes the Microsoft environment—especially the ubiquitous Excel spreadsheet and, increasingly, communication platform Teams. If successfully integrated with Workspace, Sibley hopes this will give LSEG an advantage.

“We have a large penetration that pales in comparison to something like Teams, but we have the credibility and capability,” Sibley says. “With Microsoft, that makes a pretty powerful combination.”

LSEG is also working with Microsoft on building out new analytics and modeling as services, which will allow LSEG customers to use a cloud-based engine to access LSEG analytical tools and modeling frameworks through Workspace, Excel, API, or other customer-defined front ends.

No “I” in Teams

Microsoft Teams, and to a lesser extent Excel, are the double pivots upon which the idea of a trusted directory for financial services revolves.

The methodology goes like this: If clients are already using Teams and Excel to communicate about trading, to call and text colleagues, and to create collaborative groups, they could just as easily do that through an application like Workspace. Because so many people use Teams anyway, a future integration would put LSEG in a commanding position in the communications space—at least that’s the exchange’s gambit.

Nej D’jelal, head of Workspace, says that while he wouldn’t speak about creating a LinkedIn-like product for financial services, one of the criteria for improving workflow includes the ability to create a “trusted directory”. He explains that while such directories do exist in the space, there is a dearth of options that are both industry-specific and trusted.

“Do we have the potential to lean into that and think about the proposition of a directory for financial services? Yes, we do,” D’jelal says. And while the partnership is still in its infancy, the idea of a such a directory with LSEG at the helm is “beyond theory”, he says.

Elephant in the room

One trusted directory that does exist in the space is the Bloomberg Terminal. Users of the Terminal can utilize real-time financial data and newsfeeds as well as its powerful chat function. Investors can facilitate trades on it and access analytics and proprietary trading platforms. But a single Terminal subscription costs more than $20,000, and rising.

According to a former Refinitiv employee, Bloomberg already owns the de facto user directory/collaboration platform for financial markets through the Terminal.

“It’s hard to really separate collaboration from directory since collaboration is the primary use of the Bloomberg directory, and the main reason it matters to the industry is because it makes the Bloomberg Terminal so damn sticky,” they say. (Bloomberg declined to comment for this article.)

While the former employee concedes that Microsoft has made sustained efforts to improve its reputation in collaborative applications with multi-billion-dollar acquisitions of Skype ($8.5 billion) and LinkedIn ($26.2 billion), they believe that Microsoft’s focus thus far has been collaboration within individual firms, rather than between organizations.

However, the resources and focus Microsoft has invested in creating a new collaborative inter-enterprise directory with Refinitiv could potentially tip the scales in favor of the tech giant in the conversation around the best collaboration tools money can buy.

The former Refinitiv employee believes that the influential reach of Microsoft could enable LSEG to create a collaboration-and-directory platform by combining Teams and LinkedIn, taking advantage of the huge number of users already signed up to the networking site worldwide. Another advantage Microsoft has is its perceived neutrality in the industry.

“They are more neutral than the major capital markets data and tech providers, so the industry is more open to them owning the directory,” they say. “Even if LSEG/Refinitiv is a large beneficiary, in essence, Microsoft would own the directory and—in theory—companies like, say, FactSet and others could also use it.”

A different tune

This is potentially grim reading for Symphony, the company that originally launched with the much-speculated-upon goal of displacing the Terminal’s popular chat function. An industry consultant with two decades of experience says that if anyone is to create a global directory, he believes that the tie-up of LSEG-Refinitiv-Microsoft have “far better potential to do so than Symphony.”

“I really think the advent of Teams has knocked Symphony for six. More and more people are going to novate from Symphony and Slack to Microsoft.”

Symphony’s CEO says such worries over Symphony’s future are unjustified.

Levy’s dedication to the creation of a directory has been a long-term project. Before LinkedIn went public in 2006, it was part of his strategic investments portfolio during his tenure at Goldman Sachs—and he believes that LSEG’s and Microsoft’s ambitions are complementary to those of his firm. However, he demurred at the suggestion that LSEG’s partnership with Microsoft could eclipse Symphony’s place in and intentions for the collaboration space.

“It’s not worrying. I think they’re saying we [as an industry] need something, and we agree,” Levy says. “We like the work they’re doing, to be honest, but we don’t think it’s at an industry level as much as it is at an LSEG-Microsoft level. The partnership is big, but it isn’t industry.”

Levy says that while there’s no doubt Microsoft has a large presence in the business and tech worlds, Symphony has its own extended reach. The company already federates to WhatsApp, for instance, which has more than a billion users.

“We are the nucleus in the industry, and we will meet these large players someday, sooner or later,” he says.

Levy also believes the two organizations’ sheer size could hinder the creation of a trusted directory that’s meant to cater to one industry. With numerous separate companies active just within LSEG’s clearing and settlement space alone, he says integration with Microsoft could take a long time.

“They have their work cut out for them. Just the post-trade world of LSEG is massive, with LCH and Acadia and SwapClear active in that environment,” he says. “We’re very active in post-trade and would expect to work with them at that level soon.”

Levy notes that through its collaboration workflows, Symphony already has people “identified” on the platform.

Also, as the company looks to building a directory, Symphony has made strategic acquisitions of companies like trader voice and communication vendor Cloud9 Technologies and counterparty mapping platform StreetLinx. With the StreetLinx buy, the tech is allowing Symphony to take a typical directory model and build out personal fields so users can tailor their profiles to their interests, such as receiving news from the CNN app because a user chose that specific content source. The approach is meant to contrast the consumer experience, where, for example, someone receives an Instagram ad for an item they just bought in-store—a practice that just doesn’t fly in the heavily regulated financial markets.

As a result, Symphony has “multiple modes” of communicating with people and the network is industry-specific and, perhaps most importantly, secure. Levy says that, in theory, if a user can setup their “phone” with their “core interests”, the vendor can set up a permissions system to tie into that directory.

Additionally, he notes that Symphony will not allow for its users to “be watched by large companies and then targeted with things. …there’s too much give-up of information.”

Both LSEG’s Refinitiv (and Thomson Reuters/Eikon before that) and Symphony have gone up against Bloomberg and have the battle scars to prove it. Sources spoken to for this story say that their efforts to build a trusted directory do not indicate a new assault on the castle.

What these plans do show, though, is that becoming a true collaboration and workflow solution in the capital markets means creating a seamless way to identify contacts and counterparties.

Microsoft is obviously a big name to throw into the ring, but LSEG will have to prove its independence, as Microsoft has ambitions to work with the whole of the financial services industry, and not just the exchange and technology provider. And for its part, Symphony will have to show that it can build critical mass to avoid being swallowed up by the likes of LSEG and Bloomberg.

With additional reporting by Anthony Malakian