Document ID: chunk:federal_register_of_legislation:F2022L01620:front:0:p8
Version: federal_register_of_legislation:F2022L01620
Segment Type: other
Provision Reference: 
Character Range: 20037–22905

upon closing distribution channels to retail depositors. The retail run contingency plan must seek to ensure that in the event of a loss of market confidence in the ADI, retail depositors wishing to retrieve their deposits may do so as quickly and as conveniently as is practicable in the circumstances, and within the contractual terms and conditions applicable to the relevant deposit products.

    51.         An ADI's contingency funding plan must be reviewed and tested, at least annually, to ensure its effectiveness and operational feasibility. An ADI's Board must review and approve the contingency funding plan, at least annually, or more often as changing business or market circumstances require.

Classification of ADIs

    52.         For a locally incorporated ADI, APRA will determine whether an ADI is classified as a Liquidity Coverage Ratio ADI (LCR ADI) or a Minimum Liquidity Holdings ADI (MLH ADI) for the purposes of this Prudential Standard.

    53.         A foreign ADI is an LCR ADI, unless APRA determines that the foreign ADI is an MLH ADI. In making a determination, APRA will give consideration to the ADI's size and complexity with respect to liquidity risk.

    54.         An ADI is required to meet the minimum quantitative requirements associated with its classification on a continuous basis, absent a situation of financial stress.

Liquidity coverage ratio ADIs

    55.         An LCR ADI must maintain an adequate level of unencumbered high-quality liquid assets (HQLA) to meet its liquidity needs for a 30 calendar day period under a severe stress scenario, in accordance with Attachment A. Absent a situation of financial stress (refer to paragraph 5 of Attachment A):

       (a)          for a locally incorporated ADI, the value of each of the Australian dollar (AUD) LCR and all currencies LCR must not be less than 100 per cent; and

       (b)          for a foreign ADI, the value of the LCR must not be less than 40 per cent on an all currencies basis.

    56.         APRA may require an LCR ADI to maintain a higher minimum LCR if it has concerns about the ADI's liquidity risk profile or the quality of its liquidity risk management.

Minimum liquidity holdings ADIs

    57.         An MLH ADI must maintain a minimum holding of nine per cent of its liabilities in specified liquid assets, in accordance with Attachment B.

    58.         APRA may require an MLH ADI to maintain higher minimum liquidity holdings if it has concerns about the ADI's liquidity risk profile or the quality of its liquidity risk management.

Net stable funding ratio

    59.         A locally incorporated ADI classified as an LCR ADI must meet the NSFR requirements in this Prudential Standard.

    60.         A locally incorporated LCR ADI must maintain an NSFR of at least 100 per cent at all times.

    61.