Document ID: chunk:federal_register_of_legislation:F2023L01572:reg:11:p2
Version: federal_register_of_legislation:F2023L01572
Segment Type: reg
Provision Reference: reg 11 (pt 2/7)
Character Range: 76563–79436

a liquidity facility, the facility is not structured such that drawdown is certain as indicated by continuous draws;
(e)          the facility must be subject to an asset quality test that precludes it from being drawn to cover credit risk exposures that are non-performing as defined in APS 220;
(f)           the facility cannot be drawn after all applicable (e.g. transaction-specific and programme-wide) credit enhancements from which the facility would benefit have been exhausted; and
(g)          the repayment of draws on the facility (other than a servicer cash advance facility (paragraph 3 of this Attachment)) must never be subordinated to any interests of any investor in the securitisation and not be subject to deferral or waiver.

Servicer cash advances
3.             Servicer cash advances may be provided by a servicing ADI to avoid any short term limited interruption to the flow of payments to investors. In addition to the requirements in paragraphs 1 and 2 of this Attachment, except for the provisions relating to facilities in paragraph 1(c) of this Attachment and those relating to seniority in paragraph 2(g) of this Attachment, a servicing ADI must ensure that:
(a)          it is entitled to full reimbursement under the cash advance;
(b)          repayments of drawings under the cash advance rank the most senior to all other claims and must not be subject to deferral or waiver;[45] and
(c)          the cash advance facility is limited to a specified amount and is unconditionally cancellable without prior notice by the servicing ADI. The cash advance facility must otherwise extinguish no later than the earlier of the scheduled maturity of the securitisation, or the date in which the securitisation winds up.

Derivatives transactions
4.             Subject to paragraphs 5 and 6 of this Attachment, derivatives transactions conducted by an ADI in a securitisation must meet the requirements in paragraph 1 of this Attachment.
5.             An originating ADI may provide a basis swap to an SPV that does not meet all the requirements of paragraph 1(b) of this Attachment provided the swap is constructed with sufficient margin such that the ADI is not expected to be a net payer over the life of the transaction, including in the event contingencies (e.g. changes in funding costs or changes in funding composition) that may affect the margin received or paid on the swap are triggered.
6.             Derivatives transactions conducted by an ADI in a securitisation must not be subordinated to any interests of any investor in the securitisation or subject to deferral or waiver.

Services
7.             In addition to the requirements in paragraph 1 of this Attachment, an ADI that provides a service to a securitisation must ensure that the formal written agreement specifies the services to be provided and any required standards