Document ID: chunk:federal_register_of_legislation:F2023L01572:reg:11:p1
Version: federal_register_of_legislation:F2023L01572
Segment Type: reg
Provision Reference: reg 11 (pt 1/7)
Character Range: 73970–76812

11                   All other ratings    All other ratings  All other ratings

Attachment D — Facilities and services

Facilities and services
     1. A facility or service provided by an ADI to a securitisation must comply with the following:
(a)          the facility or service must be expressly stated in a formal written agreement, specify the nature and extent of the ADI's obligations as the provider of the facility or service, and there must be no explicit or implied recourse to the ADI beyond the specified contractual obligations;
(b)          the facility or service must be provided on an arm's-length basis, be subject to the ADI's normal credit approval and review processes and be transacted on market terms and conditions;
(c)          the facility (other than a servicer cash advance facility (paragraph 3 of this Attachment)) or service must be limited to a specified amount and time period. The agreement must end no later than the earlier of the date on which all claims connected with the issue of securities are paid out and the ADI's replacement as party to the agreement. A fixed termination date need not be specified, provided the facility or service extinguishes at the earliest of the scheduled maturity of the securitisation or the date on which the securitisation winds up, and the ADI has the right, at its absolute discretion, to withdraw from the commitment at any time following a reasonable period of notice;
(d)          subject to reasonable qualifications, the SPV and/or investors must have the express right to select an alternative party to provide the facility or service; and
(e)          the facility or service must be documented in a manner that clearly separates it from any other facility or service provided by the ADI. The ADI's obligations under each facility or service must be stand-alone.

Liquidity or other funding facilities
2.             In addition to the requirements in paragraph 1 of this Attachment, an ADI that provides a liquidity or other funding facility to a securitisation must ensure that:
(a)          the facility documentation clearly identifies and limits the circumstances under which it may be drawn;
(b)          drawdowns under the facility are limited to the amount that the ADI would consider likely at the time of drawdown and is capable of being fully repaid from the liquidation of the underlying exposures and any other credit enhancements;
(c)          the facility does not cover any losses incurred in the underlying pool of exposures prior to drawdown under the facility;
(d)          in the case of a liquidity facility, the facility is not structured such that drawdown is certain as indicated by continuous draws;
(e)          the facility must be subject to an asset quality test that precludes it from being drawn to cover credit risk exposures