Document ID: chunk:federal_register_of_legislation:F2024L01182:body:0:p4
Version: federal_register_of_legislation:F2024L01182
Segment Type: other
Provision Reference: 
Character Range: 8799–11658

capped rate, before a nominated expiry date; and
12.           standardised ADI – means an ADI which has not been approved by APRA to use the IRB approach to credit risk.

Adjustments and exclusions
 1.          APRA may adjust or exclude a specific prudential requirement in this Prudential Standard in relation to one or more specified ADIs or authorised NOHCs.

Previous exercise of discretion
 1.          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.

Requirements for all ADIs
 1.          IRRBB is a material risk and is a category of market and investment risk under Prudential Standard CPS 220 Risk Management (CPS 220). As part of its risk management framework required under CPS 220, an ADI must ensure that it appropriately manages its IRRBB, commensurate with the nature, scale and complexity of its operations.
 2.          An ADI's senior management must regularly (at least semi-annually) report its IRRBB exposure to its Board or Board committee.
 3.          Where APRA determines that an ADI is not appropriately managing, measuring or monitoring its IRRBB or is carrying excessive interest rate risk, APRA may require the ADI to hold additional regulatory capital, commensurate with its IRRBB and/or, in the case of a non-SFI or an SFI that does not have IRRBB model approval, comply with all or additional requirements in this Prudential Standard.

Requirements for SFIs
 1.          An SFI must prudently manage IRRBB with a management framework and governance arrangements that satisfy the requirements set out in the remainder of this Prudential Standard.
 2.          An SFI that has sought approval from APRA to become an IRB ADI must also apply for IRRBB model approval.
 3.          An IRB ADI must hold adequate capital for its IRRBB and must determine its IRRBB capital charge at least quarterly.
 4.          For a standardised ADI, the IRRBB capital charge is zero unless APRA determines otherwise.

Internal model approval process
 1.          An application for IRRBB model approval must demonstrate that the model has undergone a sufficiently long period of internal monitoring and has performed satisfactorily over that period. The length of this monitoring period will depend upon the performance of the ADI's IRRBB management framework and its track record in managing and measuring IRRBB. APRA may approve the use of an IRRBB model by an ADI.
 2.          An ADI must obtain APRA's approval prior to making any material changes to its approved IRRBB model. An ADI must notify APRA of any non-material changes no later than three months after making the change.
 3.          An ADI that has IRRBB model approval must continue to use