Australia: APRA refines its prudential approach to securitisation

The Australian Prudential Regulation Authority (APRA) has given the Australian securitisation industry further insight on its current thinking around the proposed prudential reform for securitisation in Australia. 

In an opening address at this year’s Australian Securitisation Forum conference held in Sydney, Charles Littrell, Executive General Manager at APRA, outlined the following new principles in addition to the core principles under the current prudential arrangements and which together will underpin and guide its revised prudential standard for securitisation:

• the securitisation prudential regime should explicitly allow for both funding-only and capital relief structures
• credit risks in securitisation should be both clearly assigned and, for APRA regulated entities, properly capitalised
• securitisation credit and liquidity risks should be distributed in a fashion that reduces rather than increases systemic risk
• the maturity profile of securitisations should appropriately match the maturity profile of the underlying assets, and
• securitisation should be simple to understand, transparent and low risk.

To read our longer briefing, click here.   To access APRA's presentation, click here.