Document ID: chunk:federal_register_of_legislation:F2022L01620:front:0:p20
Version: federal_register_of_legislation:F2022L01620
Segment Type: other
Provision Reference: 
Character Range: 52133–55144

a clause that says the depositor has no legal right to withdraw, the entire category of these funds must be treated as demand deposits.

    43.         An ADI may allow depositors experiencing hardship to withdraw their term deposits without changing the treatment of the entire pool of deposits. The ADI must have a policy defining hardship.

Unsecured wholesale funding outflows

    44.         For the purposes of the LCR, unsecured wholesale funding is defined as those liabilities and general obligations that are raised from non-natural persons (i.e. legal entities, including sole proprietorships and partnerships) and are not collateralised by legal rights to specifically designated assets owned by the borrowing institution in the case of bankruptcy, insolvency, liquidation or resolution. Obligations related to derivative contracts are explicitly excluded from this definition.

    45.         Wholesale funding included in the LCR is defined as all funding that is callable within the LCR's horizon of 30 days or that has its earliest possible contractual maturity date within this horizon (such as maturing term deposits and unsecured debt securities), as well as funding with an undetermined maturity. This must include all funding with options that are exercisable at the investor's discretion within the 30-day horizon. Wholesale funding that is callable by the provider of the funds, subject to a contractually defined and binding notice period surpassing the 30-day horizon, may be excluded.

    46.         Unsecured wholesale funding provided by SME customers may be treated as retail deposits where:
(a)          the deposits and other extensions of funds made by non-financial SME customers are managed as retail exposures and are generally considered as having similar liquidity risk characteristics to retail accounts; and
(b)          the total aggregated funding raised from an SME customer is less than AUD 2 million, (on a consolidated basis where applicable).

Operational deposits

    47.         For the purpose of the LCR, operational deposits are those where customers place, or leave, deposits with an ADI in order to facilitate their access and ability to use payment and settlement systems and otherwise make payments.  Deposits may only be included as operational deposits if the customer has a substantive dependency on the ADI and the deposit is required for such activities.

    48.         For the purpose of determining operational deposits, qualifying activities in this context refer to clearing, custody or cash management activities where the customer is reliant on the ADI to perform these services as an independent third-party intermediary in order to fulfil its normal banking activities over the next 30 days. These services must be provided to institutional customers under a legally binding agreement and the termination of such agreements must be subject either to a notice period of at least 30 days or to significant switching costs to be borne by