Apra’s approach to Basel III liquidity rules explained

Author: Ashley Lee | Published: 21 May 2013

KEY TAKEAWAYS

· The Australian Prudential Regulatory Authority (Apra) remains at the forefront of Basel III implementation;

· Its recently released consultation paper responds to the Basel Committee on Banking Supervision’s (BCBS) January guidance for meeting the Liquidity Coverage Ratio (LCR), although Apra takes a more conservative approach;

· Apra will recognise so-called HQLA1 assets but does not recognise any products suitable for HQLA2 or HQLA2B. However, it will monitor liquidity in eligible products;

· Apra’s proposals on net capital outflows during stress periods will require foreign banks to hold more capital in Australia.

Although the Basel Committee on Banking Supervision (BCBS) issued new guidance for meeting the Liquidity Coverage Ratio (LCR) in January 2013, the Australian Prudential Regulatory Authority (Apra) has adopted a more conservative approach.

Apra released its discussion paper, titled Implementing Basel III liquidity reforms in Australia, earlier this month. The paper outlined the introduction of the 30-day LCR...