APS 120: APRA’s Revised Draft Rules On Bank Securitisation

On 13 November 2006, the Australian Prudential Regulatory Authority (APRA) released a discussion paper and accompanying draft prudential practice standard on securitisation in the form of a new draft (new APS 120) of the existing Prudential Standard APS 120 ‘Funds Management and Securitisation’ (current APS 120). The draft proposals can be found on APRA’s website.

APRA has stated that it intends the new APS 120 to reflect the Basel II capital adequacy regime.

Scope and Application

New APS 120 has been tailored specifically to securitisation and will not apply to funds management activities. APRA has stated that funds management activities will be covered in a separate prudential standard, a draft of which will be released at a future date. New APS 120 includes attachments A to G which are referred to throughout this article and roughly approximate to the various matters covered in the guidance notes to the current APS 120.