Document ID: chunk:federal_register_of_legislation:F2022L01620:front:0:p2
Version: federal_register_of_legislation:F2022L01620
Segment Type: other
Provision Reference: 
Character Range: 2972–5979

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 corporate, the ADI must ensure that the requirements in this Prudential Standard are met on a Level 2 basis, where applicable; or

       (b)          a subsidiary of an authorised non-operating holding company (authorised NOHC), the authorised NOHC must ensure that the requirements in this Prudential Standard are met on a Level 2 basis, where applicable.

    5.             If an ADI, or a member of its Level 2 group, is the originating ADI in a securitisation and meets the operational requirements for regulatory capital relief under Prudential Standard APS 120 Securitisation (APS 120), the ADI may exclude the assets and liabilities of the relevant special purpose vehicles (SPVs) from the calculation of its minimum liquidity holdings (MLH) and net stable funding ratio (NSFR), as applicable. For the purposes of calculating its liquidity coverage ratio (LCR), an ADI must include the cash flows from the assets and liabilities of SPVs related to the ADI's securitisation activities in the ADI's reported amounts.

    6.             This Prudential Standard commences on 1 January 2023.

Interpretation

    7.             Terms that are defined in Prudential Standard APS 001 Definitions (APS 001) appear in bold the first time they are used in this Prudential Standard.

    8.             Where this Prudential Standard provides for APRA to exercise a power or discretion, this power or discretion is to be exercised in writing.

    9.             In this Prudential Standard, unless the contrary intention appears, a reference to a provision of an Act, Regulations or Prudential Standard is a reference to the provision as in force from time to time.

Definitions

    10.         The following definitions apply in this Prudential Standard:

       (a)          associated entity – an associated entity within the meaning of section 50AAA of the Corporations Act 2001; and

       (b)          financial institution – an entity within the meaning of paragraph 4 of APS 001. For the avoidance of doubt, this definition includes money market corporations, finance companies, friendly societies and the trustees of superannuation/pension funds, public unit trusts/mutual funds and cash management trusts.

Key principles

    11.         An ADI is responsible for the sound management of its liquidity risk and must have a robust framework to manage its liquidity risk accordingly.

    12.         An ADI must at all times maintain sufficient liquidity to meet its obligations as they fall due and hold a minimum level of liquid assets to survive a severe liquidity stress.

    13.         An ADI must ensure that its activities are funded with stable sources of funding on an ongoing basis.

    14.         An ADI must inform APRA as