Document ID: chunk:federal_register_of_legislation:F2024L01074:body:0:p46
Version: federal_register_of_legislation:F2024L01074
Segment Type: other
Provision Reference: 
Character Range: 125162–128183

of the past three years;
        3.           overall losses stemming from IPRE lending are less than 0.5 per cent of outstanding IPRE exposures in each of the past three years;
        4.           the ADI publicly discloses how it has satisfied the conditions in sub-paragraphs (b) and (c); and
        5.           the conditions detailed in sub-paragraphs 5(c) to 5(i) of this Attachment are also satisfied.
    If the ADI is unable to satisfy these requirements, it must immediately cease to recognise IPRE as eligible collateral.

Other eligible physical collateral
 1.              An ADI may recognise other physical collateral where the following conditions are met:
        1.           the ADI is able to demonstrate the existence of liquid markets for the disposal of collateral in an expeditious and economically efficient manner. The ADI must assess that this condition is being met both periodically and when information indicates material changes in the market;
        2.           the ADI is able to demonstrate that there are well established, publicly available market prices for the collateral. For this purpose, publicly available market prices may include valuations from independent third-party appraisers that are available for purchase and reflect the current state of the market. The ADI must also be able to demonstrate that the amount it will receive when collateral is realised does not deviate significantly from these market prices;
        3.           the ADI must have a perfected security interest in the collateral, such that it has priority over all other lenders to the realised proceeds of the collateral. The security interest must be legally enforceable in all relevant jurisdictions, and the ADI must be able to realise the value of the collateral within a reasonable timeframe;
        4.           the facility agreement must include detailed descriptions of the collateral and the right to examine and revalue the collateral at the sole discretion of the ADI;
        5.           the collateral is valued at no more than the current fair value under which it could be sold under contract between a willing seller and an independent buyer on the date of valuation;
        6.            the ADI monitors the value of the collateral on at least an annual basis. More frequent monitoring is required where the market is subject to significant changes in value;
        7.           the ADI must have the right to physically inspect the collateral and have policies and procedures in place that set out the minimum frequency of inspection (physical or otherwise) for different types of collateral and the circumstances in which an inspection (physical or otherwise) of the collateral must be performed immediately;
        8.           the ADI must have clearly documented credit policies and procedures that detail the:
                1.             types of physical collateral accepted by the ADI, and policies and practices in respect of the appropriate amount of each type