APRA Consults on Guide on Contingent Liquidity, Issues Other Updates
The Australian Prudential Regulation Authority (APRA) updated the lists of the Direct to APRA validation and derivation rules for authorized deposit-taking institutions, insurers, and superannuation entities, in addition to extending the license IN1Bank Ltd to operate as a restricted authorized deposit-taking institution for a limited time. APRA is also consulting, until September 29, 2022, on updates to the prudential practice guide on liquidity (APG 210) for locally incorporated authorized deposit-taking institutions subject to the minimum liquidity holdings requirements in the prudential standard on liquidity (APS 210).
In the update, APRA proposes to reduce the level of contingent liquidity that the authorized deposit-taking institutions are expected to hold, on the expectation that these institutions will be able to increase holdings on a timely basis, if needed, as stress conditions emerge. APRA proposes to reduce the level of contingent liquidity that minimum liquidity holding requirements from 20% to 10% of the total deposits and short-term wholesale liabilities. APRA also expects minimum liquidity holdings authorized deposit-taking institutions to ensure that they have the operational capability to increase the size of their self-securitizations to at least 20% within one month. However, if there are concerns about an authorized deposit-taking institution's operational capability to increase their self-securitization within one month or its liquidity risk profile, it would be prudent for the authorized deposit-taking institution to hold a higher level of self-securitized assets. APRA expects to release an updated version of the prudential practice guide on liquidity (APG 210) by early 2023.
Related Links
- Press Release on Guidance on Contingent Liquidity
- Guidance on Contingent Liquidity
- Consultation Letter (PDF)
- Press Release on IN1Bank License
- Notification on Validation and Derivation Rules
- Updated Validation Rules (XLSX)
- Updated Derivation Rules (XLSX)
Keywords: Asia Pacific, Australia, Banking, Reporting, Validation Rules, Derivation Rules, APS 210, Liquidity Risk, APG 210, D2A, IN1Bank, Basel, APRA
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