The Australian Prudential Regulation Authority (APRA) has written to authorised deposit-taking institutions (ADIs) subject to the Minimum Liquidity Holdings (MLH) requirement to consult on a draft FAQ clarifying the liquidity treatment of deposits placed with settlement service providers (SSPs), after observing inconsistent approaches across MLH ADIs. The proposed FAQ is intended to align treatment with Prudential Standard APS 210 Liquidity and supersedes APRA’s previous communications on these deposits. Under the draft FAQ, deposits provided to facilitate or secure settlement obligations that are encumbered should not be included as MLH liquid assets, consistent with the requirement that MLH liquid assets must be free from encumbrances. APRA notes that minimum deposits held with an SSP to mitigate the SSP’s credit exposure in the event of an ADI default, and which may not be within the ADI’s direct control as a source of liquidity, would fall into this category. Other unencumbered deposits with SSPs can be included as MLH liquid assets, including deposits used to secure overdraft facilities that can be drawn to provide liquidity within two business days up to the facility limit. Feedback is requested from MLH ADIs by 24 April 2026, including on impacts, whether additional guidance is needed, and the proposed implementation timeframe. Subject to feedback, APRA proposes the clarified treatment be reflected in ADIs’ September 2026 quarterly liquidity reporting, with no requirement to resubmit historical liquidity reporting, and expects to publish the final FAQ and implementation timeline by 15 May 2026.
Australian Prudential Regulation Authority 2026-04-02
Australian Prudential Regulation Authority consults on draft FAQ clarifying when settlement service provider deposits can count as Minimum Liquidity Holdings liquid assets
The Australian Prudential Regulation Authority has written to authorised deposit-taking institutions subject to the Minimum Liquidity Holdings requirement to consult on a draft FAQ clarifying the liquidity treatment of deposits placed with settlement service providers. The draft FAQ specifies that encumbered deposits used to facilitate or secure settlement obligations should be excluded from MLH liquid assets, while unencumbered deposits, including those securing overdraft facilities that can be drawn within two business days, may be included, aligning treatment with Prudential Standard APS 210 Liquidity and superseding previous communications.