Document ID: chunk:federal_register_of_legislation:F2022L01620:front:0:p21
Version: federal_register_of_legislation:F2022L01620
Segment Type: other
Provision Reference: 
Character Range: 54908–57324

services must be provided to institutional customers under a legally binding agreement and the termination of such agreements must be subject either to a notice period of at least 30 days or to significant switching costs to be borne by the customer if the operational deposits are moved before 30 days.

    49.         Qualifying operational deposits generated by such an activity are those where the deposits are:

       (a)          by-products of the underlying services provided by the ADI;

       (b)          not offered by the ADI in the wholesale market for the sole purpose of offering interest income; and

       (c)          held in specifically designated accounts and priced without giving an economic incentive to the customer to leave excess funds in these accounts.

    50.         Any excess balances that could be withdrawn without jeopardising these clearing, custody or cash management activities do not qualify as operational deposits.

Liquidity facilities

    51.         A liquidity facility is any committed, undrawn back-up facility that would be used to refinance the debt obligations of a customer in situations where such a customer is unable to rollover that debt in financial markets. The amount of any commitment to be treated as a liquidity facility is the amount of the outstanding debt issued by the customer (or proportionate share of a syndicated facility) maturing within a 30-day period that is backstopped by the facility. Any additional capacity of the facility is to be treated as a committed credit facility. General working capital facilities for corporate entities (e.g. revolving credit facilities in place for general corporate or working capital purposes) must not be classified as liquidity facilities, but as credit facilities.

    52.         Notwithstanding paragraph 51 of this Attachment, any facilities provided to hedge funds, money market funds and special purpose funding vehicles, or other vehicles used to finance an ADI's own assets, must be captured in their entirety as a liquidity facility to a financial institution.

    53.         The following table sets out the run-off rates that must be applied to each liability and off‑balance sheet cash outflow category.

    Table 3 – Cash outflow categories

Run-off rate (%)  Cash outflow category
                  Retail  and qualifying SME deposits (refer to paragraphs 34 to 40 and 46)

  *