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Banking (prudential standard) determination No. 13 of 2022

Prudential Standard APS 210 Liquidity

Banking Act 1959
I, Renée Roberts, a delegate of APRA:

(a)               under subsection 11AF(3) of the Banking Act 1959 (the Act) REVOKE Banking (prudential standard) determination No. 1 of 2017, including Prudential Standard APS 210 Liquidity made under that determination; and

(b)               under subsection 11AF(1) of the Act DETERMINE Prudential Standard APS 210 Liquidity, in the form set out in the schedule, which applies to all ADIs and authorised NOHCs to the extent provided in paragraphs 2 to 5 of the prudential standard.

This instrument commences on 1 January 2023.

Dated: 1 December 2022

[Signed]

Renée Roberts
Executive Director
Policy and Advice Division
Interpretation
In this instrument:

APRA means the Australian Prudential Regulation Authority.

ADI and authorised NOHC have their respective meanings given in section 5 of the Act.

Schedule

Prudential Standard APS 210 Liquidity comprises the document commencing on the following page.

Prudential Standard APS 210

Liquidity

Objectives and key requirements of this Prudential Standard

This Prudential Standard requires an authorised deposit-taking institution to adopt prudent practices in managing its liquidity risks and to maintain an adequate level of liquidity to meet its obligations as they fall due across a wide range of operating circumstances.

The key requirements of this Prudential Standard are that an authorised 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; and

           maintain a robust funding structure appropriate for its size, business mix and complexity.

Table of contents

Authority
Application
Interpretation
Definitions
Key principles
Board and senior management responsibilities
Liquidity risk management framework
Management of liquidity risk
Funding strategy
Contingency funding plan
Classification of ADIs
Liquidity coverage ratio ADIs
Minimum liquidity holdings ADIs
Net stable funding ratio
Stress testing
Local operational capacity
Adjustments and exclusions
Previous exercise of discretion

Attachment A - Liquidity coverage ratio

Attachment B - Minimum liquidity holdings approach

Attachment C - Net stable funding ratio

Authority

     1. This Prudential Standard is made under section 11AF of the Banking Act 1959 (Banking Act).

Application

    2.             This Prudential Standard applies to all authorised deposit-taking institutions (ADIs) under the Banking Act.

    3.             A reference to an ADI in this Prudential Standard is a reference to:

       (a)          an ADI on a Level 1 basis; and

       (b)          a group of which an ADI is a member on a Level 2 basis.

    4.             If an ADI to which this Prudential Standard applies is:

       (a)          the holding company for a group of bodies