APRA Updates FAQs on Liquidity Risk Management Standards and Guidance
APRA updated the frequently asked questions (FAQs) on the management of liquidity risk by the authorized deposit-taking institutions. The questions provide further information to assist regulated entities in the interpretation of the prudential standard (APS 210), prudential practice guide (APG 210), and the reporting standard (ARS 210.0) on liquidity risk management. These FAQs are published for information purposes only and their content does not constitute legal advice.
The prudential standard APS 210 sets out the APRA requirements for authorized deposit-taking institutions in relation to the management and measurement of liquidity risk. ARS 210 is the reporting standard that sets out requirements for the provision of information to APRA related to the liquidity and funding of an authorized deposit-taking institution; it includes reporting forms and associated instructions and should be read in conjunction with the prudential standard APS 210. APS 210 and ARS 210 apply from January 01, 2018. APG 210, however, is a prudential practice guide that is intended to assist the authorized deposit-taking institutions in complying with the specified requirements and to outline prudent practices in relation to the management and measurement of liquidity risk. The key requirements of APS 210 are that an authorized deposit-taking institution must:
- Have a risk management framework to measure, monitor, and manage liquidity risk that is commensurate with the nature, scale, and complexity of the institution
- Maintain a portfolio of liquid assets sufficient in size and quality to enable the institution to withstand a severe liquidity stress
- Maintain a robust funding structure appropriate for its size, business mix, and complexity
Keywords: Asia Pacific, Banking, APS 210, APS 210, ARS 210, FAQ, Liquidity Risk, Reporting, APRA
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