Document ID: chunk:federal_register_of_legislation:F2023L01572:front:0:p19
Version: federal_register_of_legislation:F2023L01572
Segment Type: other
Provision Reference: 
Character Range: 48705–51566

in paragraphs 69 to 71 of this Prudential Standard will apply.

Repurchase of exposures out of the pool in a securitisation
6.             An originating ADI may only repurchase exposures out of the pool in a securitisation (or repurchase securities to give effect to a clean-up call) under the following circumstances:
(a)          where an ADI grants a request for a further advance by a borrower or similar purpose:
(i)            the purchase (or replacement) is conducted on an arm's-length basis and on market terms and conditions; and
(ii)         the purchased exposures (or replaced exposures) are not in default;
(b)          where an ADI is required to repurchase (or replace) an exposure as a result of a representation or warranty. In such a case the repurchase (or replacement) must be:
(i)            completed in all respects within 120 days of the transfer of exposures in a securitisation; and
(ii)         conducted on the same terms and conditions as the original transfer;
(c)          for securitisation transactions that include a clean-up call:
(i)            the exercise of the call must be at the full discretion of the originating ADI;
(ii)         the call must not be structured to avoid allocating losses to the SPV or its investors, or positions held by investors or otherwise structured to provide credit enhancement; and
(iii)       the call must only be exercisable when 10 per cent or less of the original underlying portfolio or securities issued remain outstanding.
7.             In the case of paragraph 6(b) of this Attachment, after the expiry of the 120-day period an ADI must notify APRA of any instance where it has agreed to pay damages arising out of representations and warranties or where it has agreed to reassume the credit risk of any exposures. If APRA considers that the basis for or the amount of damages paid, or assumption of credit risk by the ADI constitutes implicit support, then the provisions of paragraphs 69 to 71 of this Prudential Standard will apply.
8.             In the case of paragraph 6(c) of this Attachment, an originating ADI must have regard to Prudential Standard APS 210 Liquidity (APS 210). An ADI must address the liquidity risk associated with clean-up call options through its liquidity risk management framework to measure, monitor and manage the relevant liquidity risk.

Permanency of funding
9.             In order for an originating ADI[31] to achieve regulatory capital relief, the securitisation must have funding in place for the life of the underlying pool such that securities issued by the SPV will be sufficient to fund the exposures in the pool up to their longest contractual maturity date.

Securitisation of revolving credit facilities
10.         Where an ADI's role in a securitisation of revolving credit facilities is limited solely to managing the scheme,