Document ID: chunk:federal_register_of_legislation:F2022L01620:front:0:p16
Version: federal_register_of_legislation:F2022L01620
Segment Type: other
Provision Reference: 
Character Range: 41265–43977

own balance sheet management before applying for a CLF for LCR purposes.

    19.         Following the initial approval, an ADI must apply on an annual basis for APRA's approval of the size of the CLF that may be recognised for LCR purposes.

    20.         In the case of unforeseen changes in circumstances, an ADI may apply to APRA, at any time, for a change in the amount of its CLF to be recognised for LCR purposes by submitting an updated Board‑approved funding and liquidity plan.

    21.         In the event that an ADI draws funds under its CLF other than for intraday purposes or the funding of end-of-day balances held at the RBA, senior management must attest that the proceeds of the drawdown will be used for Australian dollar liquidity needs only. APRA must be advised of any proposed drawdown of the CLF that is not for intraday purposes or for the funding of end-of-day balances held at the RBA.

Operational requirements

    22.         All assets in the stock of eligible HQLA must be managed as part of that stock and are subject to the following operational requirements:

       (a)          the assets must be available for the ADI to convert into cash at any time;

       (b)          the assets must be unencumbered and be under the control of the specific function or functions charged with managing the liquidity risk of the ADI. This would typically be the treasurer who must have the continuous authority, and legal and operational capability, to monetise any asset in the stock; and

       (c)          control must be evidenced either by maintaining assets in a separate pool managed by the function with the sole intent to use as a source of contingent funds, or by demonstrating that the function can monetise the asset at any point in the 30-day stress period and that the proceeds of doing so are available to the function throughout the 30-day stress period without directly conflicting with a stated business or risk management strategy.

    23.         The assets must not be pledged to secure, collateralise or credit enhance any transactions or be designated to cover operational costs (such as rents and salaries). Assets received in reverse repo and securities financing transactions that are held at the ADI, have not been rehypothecated and are legally and contractually available for the ADI's use may be considered as part of the stock of HQLA.

    24.         At Level 2, an ADI may also include in the stock of HQLA, liquid assets that qualify for inclusion in the numerator of the LCR as set out in paragraphs 9 to 17, 22 to 23 and 28 of this Attachment, where they are held to meet legal entity requirements, where applicable, and the related risks as