APS 210 - Quantitative requirements table
Element of risk MHL
Regime
Key matters to consider
Minimum holdings
 For MLH, an ADI is required to maintain a portfolio of ‘specific liquid assets’ of 9% of its liabilities. APRA may require an ADI to hold a
higher specified amount of liquid assets
 Total liabilities defined as total on-balance sheet liabilities plus irrevocable commitments
Specified liquid assets
 Must be free from encumbrances, and includes:
 Notes and coins
 Some Government securities
 Bank bills, certificates of deposits and debt securities issued by ADIs
 Deposits (at call, and any other deposits readily convertible into cash within two business days) held with other ADIs, net of
placements by other ADIs
 Any other securities approved by APRA
 For a deposit with another ADI to be deemed to be readily convertible to cash within two business days and qualify as an MLH asset,
the ADI depositor needs to have unequivocal and documented contractual right to break that deposit at its sole discretion
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Element of risk MHL
Regime
Key matters to consider
Operational capacity
 For MLH, an ADI must ensure it has operational capacity to liquidate any securities held as liquid assets within two business days.
 APRA expects that an ADI will have appropriate operational access to more than one mode of access to the market, which may
include the following means:
 Direct clean sale
 Repo to a third party
 Broker-intermediated clean sale or repo to a third party
 Repo with the RBA
 ADIs are expected to ensure that they have appropriate operational access to market liquidity, and periodically test this access
 Ensure that period testing does not ‘taint’ the investment portfolio of the ADI (likely to be classified as ‘held to maturity’) from a
financial reporting perspective under the accounting standards (AASB 139 Financial Instruments: Recognition and Measurement)
Liquid asset diversification
 For MLH, ADIs are expected to ensure that their liquid asset portfolios are appropriately diversified
 Diversification should be considered along product, issue and counterparty lines
 In considering an ADI’s liquid asset diversification, APRA would not expect to see holdings of lower-rate debt securities that are
concentrated on either an individual name or aggregate basis
‘Going concern’ scenario
 An MLH ADI is also required to complete the ‘going concern’ scenario in APS 210
 Going concern scenario requires an ADI to model the expected behaviour of cash flows in the ordinary course of business for a future
period at least equal to 15 months
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Support
At Crowe Horwath we have the expertise and specialists who can support you in applying or understanding these revised liquidity standards. If you have any
questions feel free to contact Brad Bohun, Anne Lockwood, David Munday or Pippa Hobson.
Brad Bohun
Partner - Audit and Assurance
+61 2 6021 1111
brad.bohun@crowehorwath.com.au
Anne Lockwood
Partner - Audit and Assurance
+61 3 9258 6802
anne.lockwood@crowehorwath.com.au
David Munday
Partner - Audit and Assurance
+61 3 9258 9564
david.munday@crowehorwath.com.au
Pippa Hobson
Partner - Audit and Assurance
+61 8 9488 1140
pippa.hobson@crowehorwath.com.au
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