Document ID: chunk:federal_register_of_legislation:F2022L01620:front:0:p10
Version: federal_register_of_legislation:F2022L01620
Segment Type: other
Provision Reference: 
Character Range: 25357–28179

for a minimum of three business days without assistance from staff located outside Australia. For this purpose, the foreign ADI may assume that related-party operations within Australia continue to function normally.

    69.         APRA may impose additional requirements on a foreign ADI if the LOC assessment highlights issues concerning the ability of the foreign ADI to liquidate assets and make or receive payments without assistance from staff located outside Australia.

Adjustments and exclusions

70.         APRA may adjust or exclude a specific requirement in this Prudential Standard in relation to an ADI.[1]
Previous exercise of discretion

71.         An ADI must contact APRA if it seeks to place reliance, for the purposes of complying with this Prudential Standard, on a previous exemption or other exercise of discretion by APRA under a previous version of this Prudential Standard.

Attachment A

Liquidity coverage ratio

     1. The objective of the LCR is to ensure that an ADI maintains an adequate level of unencumbered HQLA that can be converted into cash to meet its liquidity needs for a 30 calendar day time period under a severe liquidity stress scenario.

     2. The LCR has two components:

       (a)          the value of the stock of HQLA; and

       (b)          total net cash outflows, calculated according to the scenario parameters set out in this Attachment.

    3.             The LCR is calculated as:

    4.             An ADI must include an appropriate buffer of HQLA over the LCR requirement in line with its liquidity risk tolerance.

    5.             During a period of financial stress, an ADI may need to liquidate part of its stock of HQLA and/or draw on its Committed Liquidity Facility (CLF) with the Reserve Bank of Australia (RBA), using the cash generated to cover cash outflows; as a consequence, the LCR may fall below the minimum level required under paragraph 55 of this Prudential Standard. An ADI must inform APRA immediately in the event of an actual breach of its LCR requirement or if it becomes aware of circumstances that may result in a breach of its LCR requirement.

Eligible stock of high‑quality liquid assets (HQLA)

    6.             There are two categories of assets that may be included in the stock of HQLA. Assets that may be included in each category are those that the ADI is holding on the first day of the stress period, irrespective of their residual maturity. The highest-quality liquid assets (HQLA1) may be included without limit, while other high-quality liquid assets (HQLA2) – which includes HQLA2A and HQLA2B – may only comprise up to 40 per cent of the total stock of HQLA. HQLA2B must not exceed 15 per cent of the total stock of HQLA. HQLA2B must be included within the overall 40 per cent cap on HQLA2.

    7.