Document ID: chunk:federal_register_of_legislation:F2023L00315:body:0:p7
Version: federal_register_of_legislation:F2023L00315
Segment Type: other
Provision Reference: 
Character Range: 18190–21111

holdings of units in unlisted or listed managed investment vehicles/entities, units are to be reported in Section 5 of this form. This requires amongst other things, disclosure of the value of the unit holding according to the nature of the underlying market exposure (i.e. fixed interest rate related, equity related, property related). If the units are held in a diversified or balanced trust, the investment holding is to be disclosed in accordance with the fund's advised asset allocation.

As an exception, if the units are held in a related party of the reporting insurer (i.e. a dedicated investment management entity for the Insurer), the insurer may apply to APRA to have such entities approved as part of its Extended Licensed Entity (ELE). This is set out in Prudential Standard GPS 114 Capital Adequacy: Asset Risk Charge (GPS 114). Once approved by APRA this will allow the insurer to look through the legal structures involved and consolidate the balance sheet of the related party with its own for the purposes of determining the Asset Risk Charge. If the insurer has an approved ELE, the underlying individual securities/investments supporting the units held by the licensed insurer are to be disclosed in the investment returns.

Subordinated debt

Subordinated debt is any debt instrument issued by a company (whether Australian or foreign) that constitutes debt subordination within the meaning of subsection 563C(2) of the Corporations Act 2001 but with the references in the subsection to 'Company' to be read as including foreign corporations. This definition does not apply to debt instruments issued by a special purpose vehicle (SPV) set up for the purpose of securitising an asset or a pool of assets. Any debt instruments issued by such an SPV are to be treated as ordinary debt instruments with the asset risk charge applied according to the issue-specific counterparty rating.

Securities purchased (sold) under agreements to resell (repurchase) and stock lending / borrowing

Treatment is to be consistent with Australian Accounting Standard AASB 139 Financial Instruments: Recognition and Measurement (AASB 139). Where the transferee of the security effectively receives a lender's rate of return, or a return that does not correlate with ownership of the securities (i.e. the risks and rewards of ownership of the underlying securities are not effectively transferred), these transactions are to be accounted for as collateralised borrowing or lending activities.

Under this method of accounting, for transactions that satisfy the above, do not adjust (i.e. increase or decrease) the physical investment security holdings/portfolios (interest rate and equity investments) for the securities that are subject to these agreements.

Securities Transacted not Settled (i.e. trade date accounting)

For the purpose of this form, include market related securities that are recorded on a