Document ID: chunk:federal_register_of_legislation:F2023L00317:body:0:p6
Version: federal_register_of_legislation:F2023L00317
Segment Type: other
Provision Reference: 
Character Range: 14885–17892

future date and on pre-arranged terms; and

       * a loan, security or other asset from another party, including written put options on specified assets with the character of a credit enhancement.

Where a life company purchasing the asset has an unequivocal right to substitute cash settlement in place of accepting delivery of the asset, and the price on settlement is calculated with reference to a general market price indicator (and not to the financial condition of any specific entity), the purchase may be treated as a market-related off-balance sheet transaction.

Written put options expressed in terms of market rates for currencies or financial instruments bearing no credit risk should not be included.

   1.7. Partly paid shares and securities

This relates to:

       * any amounts owing on the uncalled portion of partly paid shares; and

       * securities that represent commitments with certain draw down by the issuer at a future date.

   1.8. Placements of forward deposits

This relates to any agreement between a life company and another party whereby the life company will place a deposit at an agreed rate of interest with that party at a predetermined future date.

   1.9. Note issuance and revolving underwriting facilities

This involves arrangements whereby a borrower may draw down funds up to a prescribed limit over a predefined period by making repeated note issues to the market, and where, should the issue prove unable to be placed in the market, the unplaced amount is to be taken up or funds made available by a life company being committed as an underwriter of the facility.

   1.10.      Other Commitments

   1.10.1.                        Loans approved but Not Yet Advanced

This relates to loans that are approved but not yet drawn.

   1.10.2.                        Any other irrevocable commitments

The amount of undrawn commitment to be included in calculating life companies' off-balance sheet non-market related credit exposures is the maximum unused portion of the commitment that could be drawn during the remaining period to maturity. The drawn portion of a commitment forms part of a life company's on-balance sheet credit exposure.

     1.10.3.    Commitments that can be unconditionally revoked at any time without notice

Report the principal amount of the non-market related off-balance sheet contingent liabilities relating to commitments that can be unconditionally revoked at any time without notice.

   1.11.      All other non-market related off-balance sheet items

For any non-market related off-balance sheet transactions that give rise to credit risk but are not specifically identified above, a life company should consult APRA on the appropriate counterparty grade to be used as a component of assets to be stressed under Prudential Standard LPS 114 Capital Adequacy: Asset Risk Charge.

It is calculated automatically by the form.

   1.12.      Total non-market related off-balance sheet items

This is