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    APRA Defers Commencement of Six Standards Due to COVID-19 Outbreak

    April 16, 2020

    In response to COVID-19 outbreak, APRA has announced new commencement dates for six prudential and reporting standards that have been finalized but are yet to fully come into effect. These standards are related to margining and risk mitigation for non-centrally cleared derivatives, information security, credit risk management, and associations with related entities. APRA will defer, by 12 months, the next two phase-in periods of initial margin requirements for non-centrally cleared derivatives as set out in CPS 226, in line with the joint decision of BCBS and IOSCO.

    In relation to the CPS 234 on third-party arrangements transition provision, APRA will consider requests for a six-month extension by regulated entities on a case-by-case basis. Entities seeking an extension must advise APRA of the nature of their third-party arrangements and how they are monitoring the risks associated with these arrangements. The affected standards and their revised commencement dates have set out in the table below.

    Industry

    Prudential Standard

    Initial Commencement Date

    Revised Commencement Date

    Cross-industry

    CPS226 Margining and Risk Mitigation for Non-Centrally Cleared Derivatives (phase-in of initial margin requirements)

    September 01,2020, 2021

    September 01, 2021, 2022

    CPS234 Information Security (third-party arrangements transition provision)

    July 01, 2020

    Six month extension to January 01, 2021 available on a case-by-case basis

    Banking

    APS220 Credit Risk Management

    January 01, 2021

    January 01, 2022

    APS222 Associations with Related Entities

    ARS222.0 Exposures to Related Entities

    ARS222.2 Exposures to Related Entities – Step-in risk

    January 01, 2021

    January 01, 2022

    Additionally, the work on product responsibility under the Banking Executive Accountability Regime has now been subsumed into work on the Financial Accountability Regime, as mentioned in the Government’s proposal paper on Financial Accountability Regime. APRA intends to release further information on product responsibility when the Government consults on the exposure draft legislation and the implementation timeframe for the Financial Accountability Regime. APRA will formally amend the commencement dates for affected prudential and reporting standards in due course.

     

    Related Link: Press Release

     

    Keywords: Asia Pacific, Australia, Banking, COVID-19, Deadline Extension, Credit Risk, Derivatives, BEAR, Governance, Reporting, Cyber Risk, Third-Party Arrangements, BCBS, IOSCO, APRA

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