Document ID: chunk:federal_register_of_legislation:F2012L02221:body:0:p3
Version: federal_register_of_legislation:F2012L02221
Segment Type: other
Provision Reference: 
Character Range: 5565–8440

Board of the RSE licensee (the Board).[4]
10.         An RSE licensee must determine a tolerance limit below the ORFR target amount (tolerance limit) that reflects the level below which the RSE licensee must take action to replenish financial resources held to meet the ORFR target amount. The tolerance limit must have regard to the size, business mix and complexity of the RSE licensee's business operations and be approved by the Board.
11.         APRA may require an RSE licensee to[5]:
       (a)          meet an ORFR target amount determined by APRA, within a specified time; or
       (b)          adopt a tolerance limit determined by APRA
if APRA considers that the ORFR target amount or tolerance limit set by the RSE licensee, as relevant, does not appropriately reflect the operational risks of the RSE licensee's business operations.
12.         The Board is ultimately responsible for ensuring that the RSE licensee holds, and has unfettered access to, financial resources to meet the ORFR target amount.
RSE licensees that are part of a group[6]
    13.         Where an RSE licensee is part of a corporate group, and the RSE licensee utilises group policies or functions, the Board must approve the use of group policies and functions and must ensure that these policies and functions give appropriate regard to the RSE licensee's business operations.

Financial resources to meet the ORFR target amount
14.         The financial resources held to meet the ORFR target amount must be held either as:
       (a)          an operational risk reserve held within an RSE;
       (b)          operational risk trustee capital held by the RSE licensee; or
       (c)          a combination of both an operational risk reserve held within an RSE and operational risk trustee capital held by the RSE licensee.
15.         To be eligible to meet the ORFR target amount, an operational risk reserve held within an RSE must:
       (a)          be separately identifiable from member accounts and reserves held in the RSE for other purposes; and
       (b)          provide an unrestricted commitment of financial resources to address losses arising from operational risks in a timely manner.
16.         To be eligible to be used to meet the ORFR target amount, operational risk trustee capital must be held in a form that is equivalent to Common Equity Tier 1 capital.[7]
Use of financial resources held to meet the ORFR target amount
17.         An RSE licensee may only use the financial resources held to meet the ORFR target amount to make a payment to address an operational risk event or to enable it to meet the requirements in paragraphs 19(h) and (i) inclusive.
ORFR strategy
18.         An RSE licensee must have a strategy, approved by the Board, for meeting the ORFR target amount (ORFR strategy).[8] The Board is ultimately responsible for ensuring the