Document ID: chunk:federal_register_of_legislation:F2024L01518:body:0:p21
Version: federal_register_of_legislation:F2024L01518
Segment Type: other
Provision Reference: 
Character Range: 55774–58541

an SFT may apply paragraph 38(b) of this Attachment to calculate its exposure measure for the transaction where:
         1.           the ADI provides an indemnity or guarantee to a customer or counterparty for any difference between the value of the security or cash that the customer has lent and the value of collateral that the borrower has provided; and
         2.           the ADI's exposure to the transaction is limited to the guaranteed difference between the value of the security or cash its customer has lent, and the value of the collateral the borrower has provided.
    Where the ADI is further economically exposed (i.e. beyond the guarantee for the difference) to the underlying security or cash in the transaction, a further exposure equal to the full amount of the security or cash must be included in the exposure measure.
 1.          Where an ADI acting as an agent provides an indemnity or guarantee to both parties involved in an SFT (i.e. securities lender and securities borrower), the ADI must calculate its exposure measure separately for each party involved in the transaction.
 2.          When an ADI acting as agent in an SFT does not provide an indemnity or guarantee to any of the involved parties, the ADI has no exposure to the SFT, and is not required to include those SFTs in its exposure measure.
[1]  Refer to subsection 11AF(2) of the Banking Act.

[2]  Unless otherwise indicated, a reference to the Board of an ADI in this Prudential Standard is also a reference, where relevant, to the Board of the entity that heads the Level 2 group.

[3]  This includes all distributions on mutual equity interests which must be treated as dividends for the purposes of this Prudential Standard, as required by Prudential Standard APS 111 Capital Adequacy: Measurement of Capital.

[4]  All payments of dividends or interest on eligible Additional Tier 1 Capital instruments are, by definition, required to be discretionary.

[5]  This would include any remuneration payments that are made upon the exercise of a discretionary judgement of the Board or senior management of an ADI as to the amount or timing of payment.

[6]  Any minimum PCR dollar amount determined under this sub-paragraph applies in addition to minimum PCRs determined elsewhere under this Prudential Standard.
[7]  For the avoidance of doubt, this does not include the repayment of a Tier 2 Capital instrument upon its contractual maturity date.

[8]  This includes distributions on mutual equity interests which are also subject to the limits set out in Attachment I to APS 111.

[9]  For risk-weighted credit exposures under APS 180, refer to sub-paragraph 13(a) of APS 180. For capital charges under APS 180, refer to sub-paragraphs 13(b) and 13(c) of APS 180.