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PEXA's new marketplace a bid to monopolise document supply, GlobalX says

Posted on 18/12/2018 by SuperUser Account
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Econveyancing platform PEXA wants to set itself up as a monopoly provider of documents for property transactions and has overstepped regulatory boundaries to set up its new document market place, says Peter Maloney, the chief executive of provider GlobalX...


Econveyancing platform PEXA wants to set itself up as a monopoly provider of documents for property transactions and has overstepped regulatory boundaries to set up its new document market place, says Peter Maloney, the chief executive of provider GlobalX.

Link Group-owned PEXA last week said it would not provide documents itself and only started the new marketplace to reduce costs and make the provision of papers such as title deeds more efficient.

However, Peter Maloney the chief executive of information provider GlobalX, said PEXA, which already had a monopoly on processing property transactions in one state Victoria, aimed to squeeze other providers out from its platform.

"There is nothing to stop PEXA from accumulating volume and then directly applying for their own information broker agreement, turning off the participants in the marketplace and becoming a direct supplier of lands titles searches," Mr Maloney told The Australian Financial Review on Tuesday.

"We have to keep absolutely central that the only way a Victorian can get the keys to their new house and the seller gets settlement funds is if the property was settled on the PEXA platform. Should a monopoly be able to leverage its market power and it extend into other adjacent services that risks reducing competition and innovation in the legal technology space?"

PEXA, set up out of a COAG agreement and purchased by Link Group earlier this year, is currently the only online platform to allow electronic end-to-end property transactions. Use of it became mandatory in Victoria this year and it will become mandatory in NSW next year.

While rival platforms are starting, such as ASX Ltd- and InfoTrack-owed Sympli, they are well behind PEXA, which enjoys a first-mover advantage, and the company's position has many players and policy makers wary of the risks that could come from having one dominant provider.

GlobalX says it is the third-largest in a market place of ten providers of legal and conveyancing documents, with a global turnover of $65 million. InfoTrack and SAI Global are the largest players in Australia's $350-million market, Mr Maloney said.

PEXA chief executive Marcus Price's description of opaque and unclear pricing in the document services industry was "complete and utter rubbish," he also said.

"It is a highly competitive industry," Mr Maloney said. "It is price-sensitive and the only way a provider in our industry succeeds is to continually investing in technology."

He also said PEXA had created the market place before the rules governing its remit allowed it to do so.

The company is overseen by the Australian Registrars' National Electronic Conveyancing Council (ARNECC) regulator and the rules currently in place, called the Model Operating Rules, do not allow it to set up downstream services, even though a draft version of the next set of rules - currently open for consultation - contemplate it, Mr Maloney said.

"Pexa have overstepped the boundaries by commencing to offer downstream services," he said.

The regulator, however, disagreed. ARNECC chairwoman Jean Villani said on Tuesday, after the Financial Review's print deadline, that while the next version of the rules would regulate downstream services to ensure a level playing field between operators, PEXA was not prevented from offering them now.

"Legislation that came into effect in jurisdictions between 2012 and 2014 allows [operators] to operate/provide additional services in addition to an Electronic Lodgement Network," she said.

PEXA boss Mr Price said the company wasn't becoming an information provider but only offering a marketplace.

"GlobalX would indeed be welcome to offer its services through the Marketplace. In fact, they were invited."

To read the original article from the Financial Review, click here.