Clarification of eligible liquid assets for meeting liquidity requirements

To: Authorised Deposit-taking Institutions (ADIs) that are subject to the Minimum Liquidity Holdings (MLH) requirement or that are Providers of Purchased Payment Facilities (PPFs).

This letter clarifies APRA’s approach to eligible liquid assets in response to the Reserve Bank of Australia’s (RBA’s) announcement that it will remove securities from its published list of securities eligible for repurchase agreement when they enter their books-closed period to maturity. For more information about this announcement, please refer to the RBA's page: Eligible Securities | Criteria for Domestic Market Operations.

APRA considers it appropriate that ADIs continue to treat debt securities as suitable for the purpose of meeting their liquidity requirements under Prudential Standard APS 210 Liquidity and Prudential Standard APS 610 Prudential Requirements for Providers of Purchased Payment Facilities if they were initially eligible for repurchase agreement by the RBA but cease to be eligible because they enter into their books-closed period to maturity. In all other cases, securities must be eligible for repurchase agreement with the RBA to meet liquidity requirements for MLH and PPF ADIs.

This decision is consistent with APRA’s continued focus on proportionality in its regulatory approach.

If you have any questions, please contact your APRA supervisor.

Yours sincerely,
Sean Carmody
Executive Director, Policy and Advice