Independent Review – Australian Prudential Regulation Authority
On 7 December 2017, the Australian Prudential Regulation Authority released its revised prudential framework for large exposures of authorised deposit-taking institutions (ADI).
The revised Prudential Standard APS 221 Large Exposures implements the Basel large exposure framework with adjustments to reflect Australian conditions. The framework aims to limit the impact of losses when a large counterparty defaults, and to restrict the potential for problems in one entity from spreading across the financial system. Revisions, reflecting the revised framework, have also been made to the reporting standard, Reporting Standard ARS 221.0 Large Exposures.
APRA certified the process and analysis in developing the revised framework undertaken by the Authority through the public discussion paper, Revisions to Large Exposures, as an independent review equivalent to a Regulation Impact Statement (RIS) as set out in The Australian Government Guide to Regulation. The Office of Best Practice Regulation (OBPR) does not assess independent reviews.
APRA was compliant with the Australian Government RIS requirements and consistent with best practice.
APRA estimated average annual regulatory savings at $360,000 per annum relative to the implementation of the Basel large exposures framework without recognition of Australian conditions. The OBPR agreed with this estimate.