Document ID: chunk:federal_register_of_legislation:F2022L01492:body:0:p5
Version: federal_register_of_legislation:F2022L01492
Segment Type: other
Provision Reference: 
Character Range: 12114–15344

(c)          the investment is appropriate for the investment option.

Monitoring investments

    25.         An RSE licensee must determine appropriate measures, for the purposes of monitoring performance on an ongoing basis, in respect of each MySuper product, each investment option and each investment within an investment option. These measures must include appropriate performance benchmarks and a methodology for setting performance benchmarks. These measures, other than performance benchmarks for each investment within an investment option, must be approved by the Board.

    26.         An RSE licensee must ensure that the performance of each investment option and each MySuper product is regularly reported to the Board and senior management. This reporting must include an assessment of the sources of out-performance and under-performance relative to appropriate performance benchmarks as determined by the RSE licensee under paragraph 25.

    27.         An RSE licensee must ensure that persons undertaking the assessment of performance, by applying and assessing the measures required in paragraph 25 are operationally independent from persons who are responsible for making the investment.

Reviewing the investment strategy

    28.         For each investment strategy, an RSE licensee must have a review policy that is approved by the Board and that, at a minimum, requires each investment strategy to be reviewed against its investment objectives on at least an annual basis. The policy must also include:

       (a)          the triggers that will cause an interim review of the investment strategy in addition to the annual review;

       (b)          the processes for reporting the results of each review to the Board; and

       (c)          the criteria that will determine whether the investment strategy must be changed.

    29.         On receipt of the results of a review of an investment strategy undertaken in accordance with the review policy, the Board must ensure that any decision to amend the investment strategy is supported by sufficient justification and analysis.

Investment stress testing

    30.         An RSE licensee must have a comprehensive investment stress testing program that is approved by the Board and is integrated into an RSE licensee's investment governance framework.

    31.         An RSE licensee must, at a minimum, determine appropriate adverse stress scenarios for the investment strategy of each option. These adverse stress scenarios must cover a range of factors that can create extraordinary losses or make the control of risk within accepted tolerance level in the investment strategy difficult.

    32.         An RSE licensee's comprehensive investment stress testing program must provide for:

       (a)          investment stress testing performed prior to the implementation of the investment strategy;

       (b)          investment stress testing based on scenarios determined in paragraph 31 to confirm that each investment strategy, including the  targets and ranges set under paragraph 20(c) and paragraph 21(a) remain appropriate on at least an annual basis; and

       (c)          investment stress testing based