The synchronisation lab, which was announced in October, is a non-live platform to “demonstrate use cases and understand business models for synchronisation”.
Synchronisation is the “orchestration of movements of central bank money between the accounts held in RT2 (Bank of England’s renewed core ledger and settlement engine), with the transfer of assets or funds on one or more external asset ledgers”.
The process has two stages: earmark and release. In the first stage, an earmark is placed, which reserves assets on an asset ledger or funds in the RT2 account.
Once this is earmarked, these funds or assets are locked and cannot be used in other transactions.
When conditions are met, the earmark is released and starts the transfer of funds and assets to settle the transfer atomically, the Bank of England said.
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In the lab, Pexa will test a housing purchase or remortgage transaction, integrating with transaction stakeholders and HM Land Registry to show an “end-to-end transaction flow”, the Bank of England said.
It is one of two firms selected to explore this topic for house purchase, with LMS being the other firm.
The lab will run for around six months, the Bank of England said.
Pexa said this offered an opportunity to test how “synchronised settlement and title lodgement can improve the security, certainty and transparency of property completions, and support better outcomes for all stakeholders”.
The firm said that currently, the property completion process is sequential, as funds are paid and then title is lodged with the Land Registry some time later. This creates a gap where lenders and consumers have paid funds but do not have ownership security or legal charge over the title.
Joe Pepper (pictured), UK CEO of PEXA, said: “To be selected by the Bank of England after a rigorous application process is a huge achievement in itself. It gives us an enormous opportunity to showcase the capabilities of the technology we’ve spent significant time and resource building as a bespoke solution for the UK.
“We will demonstrate that it is possible to eliminate property settlement risk without the need to build entirely new, duplicate infrastructure. We’re thrilled to be selected, and looking forward to getting started with the support of an expert team.”
