Communication of RBA decisions to reject repo eligibility applications
The Reserve Bank of Australia (RBA) has published information in its eligibility criteria on
communicating decisions to reject repo eligibility applications or revoke repo eligibility.
When the RBA rejects an application for repo eligibility, the RBA will send a rejection letter to the
applicant at the same time that the RBA publishes the rejection decision in the Outstanding
applications and ineligible securities file (see the ‘Schedule of releases’ on the eligibility criteria
webpage).
Should the RBA revoke repo eligibility (for example, because new information is received, existing
information is reinterpreted or the RBA’s eligibility criteria is revised), the RBA will promptly
send a rejection letter to the applicant and the List of eligible securities file and the Outstanding
applications and ineligible securities file will each be updated accordingly the next time they
are released (see the ‘Schedule of releases’ on the eligibility criteria
webpage). However, a rejection letter will ordinarily not be sent where a previously eligible security
changes in a way that means it no longer meets the RBA’s eligibility criteria (for example, a call
notice is issued or a security’s credit rating is downgraded and no longer meets the RBA’s
minimum requirements) and a rejection letter might not be sent if the RBA revokes repo eligibility due to
a revision to the RBA’s eligibility criteria which has otherwise been communicated by the RBA (for
example, by publication on the eligibility criteria
webpage).
An applicant may appeal the RBA’s decision to reject an application for repo eligibility, or revoke
repo eligibility, by emailing eligible_securities@rba.gov.au
with supporting information.
Self-securitisations – remit to the collections account at least weekly
The RBA has updated Condition 16(a) in its eligibility criteria to make
it clear that principal and interest collections must be required to be remitted to the
issuer’s collections account at least weekly.
As previously communicated:
- this requirement applies to any self-securitisation that the Reserve Bank first approves for repo
eligibility after 31 March 2025; and
- existing self-securitisations (i.e. self-securitisations first approved by the Reserve Bank for repo
eligibility on or before 31 March 2025) that do not meet this criteria after 31 March 2025
will incur a higher margin ratio (see Margin Ratios).
Consequences of Late Securitisation Reporting and Late Notifications to the RBA
The RBA has updated its eligibility criteria and asset-backed
securities maintenance requirements to make clear the potential consequences for late
securitisation reporting and late notifications.
Where entities are at risk of missing the RBA’s securitisation reporting and notification deadlines,
the RBA should be contacted promptly. Extensions can be requested but will generally only be granted
under exceptional circumstances. Any penalties imposed, such as penalty haircuts or revocation of repo
eligibility, are at the RBA’s discretion.
Late securitisation reporting
Under Condition 15(e) in the RBA’s eligibility criteria, the
RBA now differentiates between late reporting marketed asset-backed securities (ABS) and late reporting
self-securitisations.
- Marketed asset-backed securities will cease to be eligible if they do not report on time. Securities
will remain ineligible for at least one month, until all outstanding submissions and the next
month’s submission have been made.
- Self-securitisations will incur a 15 per cent penalty haircut (in the form of an
‘Additional Discount’, see Margin Ratios) if they do not
report on time. The penalty haircut will remain in place until all outstanding submissions and the
next month’s submission have been made. However, repo eligibility may also be revoked, including
in the event of repeated or extended late submissions. The RBA will notify the Australian Prudential
Regulation Authority (APRA) of any late reporting self-securitisations.
Late notifications to the RBA
The RBA has certain notification requirements relating to changes to asset-backed securities (ABS), as
well as additional requirements for notifications relating to self-securitisations.
- Marketed ABS and self-securitisations must meet certain maintenance
requirements, including for legal document changes, ISIN changes, large balance changes and
ratings affirmations and insurability attestations for ABS with revolving pools. Failure to
meet these requirements may result in penalty haircuts or revocation of repo eligibility.
- Condition 16(b) in the RBA’s eligibility criteria
requires the ADI sponsor of a self-securitisation to submit an annual certificate to the RBA between
31 January and 31 March each year, starting in 2025. Late annual certificate submissions to
the RBA may result in penalty haircuts being applied, or revocation of repo eligibility, including if
the Annual Certificate is late for an extended period.
- Condition 16(f) in the RBA’s eligibility criteria
requires the ADI sponsor of a self-securitisation to notify the RBA of certain transaction changes
with minimum notification periods. Failure to meet Condition 16(f) may result in penalty haircuts
being applied or revocation of repo eligibility.
- Condition 16(g) in the RBA’s eligibility criteria
requires the ADI sponsor of a self-securitisation to ensure that certain information is provided to
the RBA. Failure to meet Condition 16(g) may result in penalty haircuts being applied or revocation
of repo eligibility.
The RBA will also notify APRA if the RBA becomes aware of any late notifications relating to a
self-securitisation.
For further information please contact the Eligible Securities Team at eligible_securities@rba.gov.au.
Risk & Compliance Department
Reserve Bank of Australia
14 August 2024
