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Banking (prudential standard) determination No. 8 of 2022

Prudential Standard APS 115 Capital Adequacy: Standardised Measurement Approach to Operational Risk

Banking Act 1959
I, Renée Roberts, a delegate of APRA:

(a)          under subsection 11AF(3) of the Banking Act 1959 (the Act) REVOKE Banking (prudential standard) determination No. 7 of 2012 including Prudential Standard APS 114 Capital Adequacy: Standardised Approach to Operational Risk made under that determination;
(b)          under subsection 11AF(3) of the Act REVOKE Banking (prudential standard) determination No. 8 of 2012 including Prudential Standard APS 115 Capital Adequacy: Advanced Measurement Approaches to Operational Risk made under that determination;
(c)           under subsection 11AF(3) of the Act REVOKE Banking (prudential standard) determination No. 6 of 2020 including Prudential Standard APS 115 Capital Adequacy: Standardised Measurement Approach to Operational Risk made under that determination; and
(d)          under subsection 11AF(1) of the Act DETERMINE Prudential Standard APS 115 Capital Adequacy: Standardised Measurement Approach to Operational Risk in the form set out in the schedule, which applies to ADIs and authorised NOHCs to the extent provided in paragraphs 2 to 4 of the prudential standard.
This instrument commences on 1 January 2023.

Dated:  1 December 2022

[Signed]

Renée Roberts
Executive Director
Policy and Advice Division
Interpretation
In this instrument:

APRA means the Australian Prudential Regulation Authority.

ADI and authorised NOHC have their respective meanings given in section 5 of the Act.

Schedule

Prudential Standard APS 115 Capital Adequacy: Standardised Measurement Approach to Operational Risk comprises the document commencing on the following page.

Prudential Standard APS 115

Capital Adequacy: Standardised Measurement Approach to Operational Risk
Objectives and key requirements of this Prudential Standard
This Prudential Standard requires an authorised deposit-taking institution to hold sufficient regulatory capital against its operational risk exposures.
The key requirement of this Prudential Standard is that an authorised deposit-taking institution that is a significant financial institution must calculate its capital requirement for operational risk based on its business indicator, a financial statement-based proxy of its operational risk exposure.

Table of Contents
Authority
Application
Interpretation
Scope
Adjustments and exclusions
Previous exercise of discretion
Calculation of the business indicator
Calculation of operational risk regulatory capital

Authority
     1. This Prudential Standard is made under section 11AF of the Banking Act 1959 (Banking Act).

Application
2.             This Prudential Standard applies to authorised deposit-taking institutions (ADIs) except:
(a)          foreign ADIs;
(b)          purchased payment facility providers (PPF providers); and
(c)          non-significant financial institutions (non-SFIs).
    Notwithstanding paragraph (c), APRA may determine, in a particular case, that this Prudential Standard applies to a non-SFI.
3.             A reference to an ADI in this Prudential Standard is a reference to:
(a)          an ADI on a Level 1 basis; and
(b)          a group of which an ADI is a member on a