Document ID: chunk:federal_register_of_legislation:C2025C00029:section:4:p4
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 4 (pt 4/25)
Character Range: 7321812–7324562

out the zero‑capital amount

820‑942  How to work out the zero‑capital amount
 (1) An entity's zero‑capital amount at a particular time is the result of the method statement in this subsection.

      Method statement
           Step 1. Work out the total value, as at that particular time, of all the assets of the entity that represent *debt interests that:

                (a) are of a kind commonly dealt in by entities that carry on a *business of dealing in securities; and
                (b) the entity has sold under a reciprocal purchase agreement (otherwise known as a repurchase agreement), sell‑buyback arrangement or securities loan arrangement; and
                (c) the entity has not yet repurchased under the agreement or arrangement.

           Step 2. Add to the result of step 1 the total value, as at that time, of all the *debt interests issued to the entity to which the following paragraphs apply at that time:

                (a) the debt interests remain *on issue;
                (b) each of the debt interests is a loan of money for which no fees, charges or other consideration for the purpose of enhancing the credit rating of the issuer of the interest has been paid or is payable to the entity, any of the entity's *associates or another entity that is a *foreign entity;
                (c) each of the entities issuing the interests has the required credit rating for the interests concerned in accordance with subsections (4) and (5).

           Step 3. Add to the result of step 2 the total value, as at that time, of all the *debt interests that are assets of the entity (whether they are debt interests issued to the entity or not) and to which the following paragraphs apply at that time:

                (a) the risk weight of each of the debt interests is either 0% or 20% under the *prudential standards;
                (b) the debt interests do not satisfy all of the paragraphs in step 2.

           Step 3A. Add to the result of step 3 the total value, as at that time, of all the assets of the entity, to the extent that they:

                (a) consist of rights to the return of assets covered by subsection (2A); and
                (b) are covered by none of steps 1, 2 and 3.

           Step 4. Add to the result of step 3A the total value, as at that time, of all the *securitised assets that the entity has at that time if the entity is a *securitisation vehicle at that time (see subsections (2) and (3)). The result is the zero‑capital amount.
 (2A) This subsection covers an asset that:
 (a) the entity provided as security for the performance of its obligations in relation to securities it acquired under a reciprocal purchase agreement (otherwise known as a repurchase