Document ID: chunk:federal_register_of_legislation:F2016L01429:body:0:p2
Version: federal_register_of_legislation:F2016L01429
Segment Type: other
Provision Reference: 
Character Range: 2683–5722

are that a Level 3 Head must:
     * have a policy for the Level 3 group that deals with the measurement, management and monitoring of, and reporting on, aggregate risk exposures associated with all risk types within the group;
     * develop and implement effective systems and processes to manage, monitor and report on aggregate risk exposures; and
     * meet minimum requirements with respect to aggregate risk exposures and certain related matters.
The requirements in this Prudential Standard are in addition to the obligations imposed on prudentially regulated institutions under other Prudential Standards.

Authority
     1. This Prudential Standard is made under:
(a)          section 11AF of the Banking Act 1959 (Banking Act);
(b)          section 32 of the Insurance Act 1973 (Insurance Act); and
(c)          section 230A of the Life Insurance Act 1995 (Life Insurance Act).

Application
2.             This Prudential Standard applies to each Level 3 Head.
3.             This Prudential Standard commences on 1 July 2017.

Interpretation
4.             Terms that are defined in Prudential Standard 3PS 001 Definitions appear in bold the first time they are used in this Prudential Standard.
5.             Where this Prudential Standard provides for APRA to exercise a power or discretion, this power or discretion is to be exercised in writing.

Aggregate risk exposures
6.             For the purposes of this Prudential Standard, aggregate risk exposures arise from exposures to individual counterparties, a group of related individual counterparties, a group of counterparties with similar characteristics (e.g. in specific geographical locations or industry sectors) or to particular asset classes (e.g. property holdings or other investments) where the exposures have the potential to result in material losses for the Level 3 group or an individual prudentially regulated institution in the group. Aggregate risk exposures include both on- and off-balance sheet exposures. Unlimited exposures to any individual counterparty (e.g. a general guarantee of the obligations of a counterparty) are not permitted unless agreed with APRA.
7.             For the purposes of this Prudential Standard, when determining aggregate risk exposures the Level 3 Head must ensure that exposures to the wider conglomerate group to which the Level 3 group belongs are taken into account.
8.             For the purposes of this Prudential Standard, aggregate risk exposures exclude any exposures held, in accordance with written legal agreements, by the Level 3 group on behalf of entities external to the Level 3 group (e.g. custodian arrangements), even if the assets are held in the name of a Level 3 institution in the group.
9.             A Level 3 Head must have an 'aggregate risk exposures policy' that addresses all material risk exposures associated with the operations undertaken by Level 3 institutions in the Level 3 group. The policy must include systems and procedures to identify, measure, monitor, evaluate, report