ASX and InfoTrack challenge PEXA

ASX and InfoTrack challenge PEXA

8 June 2018

ASX and electronic settlement software provider InfoTrack have teamed up to challenge PEXA for a share of $200m electronic property settlement market in a move that could upset one of the year’s biggest planned floats, reports The Australian.

ASX will invest $30 million over the next few years to help create a new company called Sympli, which it will own with InfoTrack.

The new company will offer an alternative to the monopoly PEXA business that is backed by four state governments, former transport tsar Paul Little and companies including Link Administration Services and Macquarie Group.

The pair expect the business to break even in 2020-21 and puts the value of the potential market at $200 million a year.

PEXA was expected to launch a $1 billion float this year in a move that would have delivered an estimated $350 million to the NSW, Victorian, Queensland and West Australian governments that have fostered its development to replace inefficient paper-based systems.

The float valuation could now face some pressure, and PEXA and its bankers will doubtless be closely questioned by potential investors in the coming weeks.

One of Sympli’s biggest barriers will be securing approval to become an electronic lodgement network operator with the regulator, the Australian Registrars’ National Electronic Conveyancing Council. PEXA remains the only organisation with accreditation.

The ASX/Infotrack partnership is a smart tie-up for ASX and one which offsets the usual start-up risks, says the AFR.

InfoTrack knows the market inside and out; it is the biggest name in property searches in the country, and the second-biggest provider of manual property settlements.

“Entering the electronic property settlement market is a natural evolution for ASX,” ASX chief executive Dominic Stevens said in the exchange announcement.

“We already settle approximately $70 billion in transactions electronically every day and have been the central settlement venue for the Australian financial market for decades.”

But InfoTrack is also—and this is what makes this deal so juicy—one of PEXA’s biggest suppliers, and has integrated PEXA into its own offering.

Chief executive David Wills said InfoTrack’s current 8,000 clients had been asking for alternatives to the PEXA service because of issues such as having to manually key in duplicate data.

InfoTrack’s chairman Stephen Wood said the business will remain a “big supporter” of PEXA and will continue to offer clients integration with the incumbent’s system.

ASX chief executive Dominic Stevens said the markets operator would bring its expertise in settling tens of billions of dollars worth of transactions daily in equities, derivatives and bonds through its CHESS and Austraclear systems.

ASX is separately working on blockchain technology for its financial markets business but had no plans to incorporate it into the property conveyancing business.

Subject to regulatory approvals, Sympli is expected to be operating before the end of 2018.