The Australian Prudential Regulation Authority has released a second consultation package outlining its proposed implementation of the Basel III liquidity reforms for authorized deposit-taking institutions (ADIs). The package includes a discussion paper, a revised draft Prudential Standard APS 210 Liquidity (APS 210) and a draft Prudential Practice Guide APG 210 Liquidity. The package addresses the main issues raised in submissions to APRA’s previous discussion paper released in November 2011, and includes revisions to the Basel III liquidity reforms published by the Basel Committee in January 2013.

In the 2011 paper, APRA outlined proposals to implement the Basel III liquidity reforms. These proposals included two new quantitative measures — a 30-day Liquidity Coverage Ratio (LCR) to address an acute stress scenario and a Net Stable Funding Ratio (NSFR) to encourage longer-term funding resilience.

The proposed requirements would apply to any ADIs that are currently required to conduct scenario analysis of their liquidity needs under different operating circumstances. APRA is proposing to implement the liquidity reforms on the previously published timetable. Accordingly, the Liquidity Coverage Ratio will become effective from 1 January 2015 and the Net Stable Funding Ratio from 1 January 2018.