Financial Sector (Collection of Data) (reporting standard) determination No. 31
of 2014
EXPLANATORY STATEMENT
Prepared by the Australian Prudential Regulation Authority (APRA)
Financial Sector (Collection of Data) Act 2001, section 13
Acts Interpretation Act 1901, subsection 33
Under paragraph 13(1)(a) of Financial Sector (Collection of Data) Act 2001 (the Act), APRA may, by writing, determine reporting standards with which financial sector entities must comply. Such standards relate to reporting financial or accounting data and other information regarding the business or activities of the entities. Subsection 33(3) of the Acts Interpretation Act 1901 provides that where an Act confers a power to issue an instrument the power shall, unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to revoke any such instrument.
On 20 November 2014, APRA made Financial Sector (Collection of Data) (reporting standard) determination No. 31 of 2014 (the instrument) which revokes Reporting Standard ARS 221.0 Large Exposures made under Financial Sector (Collection of Data) (reporting standard) determination No. 22 of 2008 and determines a new Reporting Standard ARS 221.0 Large Exposures (ARS 221.0).
The instrument commences on 1 January 2015.
- Background
APRA’s mandate is to ensure the safety and soundness of prudentially regulated financial institutions so that they can meet their financial promises to depositors, policyholders and fund members within a stable, efficient and competitive financial system. In response to the global financial crisis, the Basel Committee on Banking Supervision (Basel Committee) developed and released global liquidity measures for internationally active banks, known as Basel III liquidity. APRA incorporated these measures in Prudential Standard APS 210 Liquidity (APS 210). APS 210 includes one of the two Basel Committee global liquidity standards, the Liquidity Coverage Ratio (LCR). The Basel III liquidity reforms replace ‘Scenario Analysis’ with the LCR regime from 1 January 2015.
Large liability exposures information is collected by APRA under Reporting Form ARF 221.0 Large Exposures, Section D.
2. Purpose and operation of the instruments
The purpose of the instrument is to revoke the existing ARS 221.0 Large Exposures and to replace it with a new ARS 221.0.
The change to ARS 221.0 is to the reporting instructions such that, from 1 January 2015, all ADIs will be required to submit this reporting form on a quarterly basis. There are no changes to the reporting forms.
ARS 221.0 collects data on an ADI’s funding concentrations by counterparty. Section D of this form facilitates the reporting of data required to quantify funding concentration risk. The reporting of this data is necessary to quantify this risk. This information is used by APRA for the purpose of prudential supervision, including assessing compliance with Prudential Standard APS 221 Large Exposures.
3. Consultation
As part of its consultation on Basel III liquidity implementation in Australia, APRA had also consulted industry on a change to the instructions to ARS 221.0.
This consultation has been set out in three discussion papers and a final response paper:
• Discussion paper, ‘Implementing Basel III liquidity reforms in Australia, November 2011’;
• Discussion paper, ‘Liquidity reporting requirements for authorised deposit-taking institutions, November 2012’;
• Discussion paper, ‘Implementing Basel III liquidity reforms in Australia, May 2013’; and
• Response to Submissions, ‘Implementing Basel III liquidity reforms in Australia, December 2013’.
As part of the above consultation, APRA proposed that ARF 221.0 instructions would be amended so that all ADIs must submit the ARF 221.0 Section D form from 1 January 2015.
4. Regulation Impact Statement
APRA prepared a Regulation Impact Statement (RIS) Implementing Basel III liquidity reforms in Australia (Office of Best Practice Regulation (OBPR) ID: 2012/14531)). APRA noted in this RIS that a report on funding concentrations will form part of the reporting requirements for all ADIs.
5. Statement of Compatibility with Human Rights Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
A Statement of Compatibility with Human Rights is Attachment A to this Explanatory Statement.
Attachment A
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Financial Sector (Collection of Data) (reporting standard) determination No. 31 of 2014
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (HRPS Act).
Overview of the Legislative Instrument
The instrument revokes Reporting Standard ARS 221.0 Large Exposures made under Financial Sector (Collection of Data) (reporting standard) determination No. 22 of 2008 and determines a new Reporting Standard ARS 221.0 Large Exposures (ARS 221.0). ARS 221.0 aims to ensure that ADIs provide information to APRA to allow APRA to assess compliance with Prudential Standard APS 221 Large Exposures.
Human rights implications
APRA has assessed the instrument and is of the view that it does not engage any of the applicable rights or freedoms recognised or declared in the international instruments listed in section 3 of the HRPS Act. Accordingly, in APRA’s assessment, the instrument is compatible with human rights.
Conclusion
The Legislative Instrument is compatible with human rights as it does not raise any human rights issues.