Banking (prudential standard) determination No. 7 of 2024 (Cth)

Banking (prudential standard) determination No. 7 of 2024

Prudential Standard APS 116 Capital Adequacy: Market Risk

Banking Act 1959

I, Sean Carmody, a delegate of APRA:

(a) under subsection 11AF(3) of the Banking Act 1959 (the Act) REVOKE Banking (prudential standard) determination No. 9 of 2022 including Prudential Standard APS 116 Capital Adequacy: Market Risk made under that determination; and

(b) under subsection 11AF(1) of the Act DETERMINE Prudential Standard APS 116 Capital Adequacy: Market Risk in the form set out in the schedule, which applies to all ADIs and authorised NOHCs to the extent provided in paragraphs 2 to 4 of the prudential standard.

This instrument commences on 1 January 2025.

Dated: 27 November 2024

Sean Carmody Executive Director Policy and Advice Division Interpretation In this instrument:

APRA means the Australian Prudential Regulation Authority.

ADI and authorised NOHC have their respective meanings given in section 5 of the Act.

Schedule

Prudential Standard APS 116 Capital Adequacy: Market Risk comprises the document commencing on the following page.

Prudential Standard APS 116

Capital Adequacy: Market Risk

Objective and key requirements of this Prudential Standard

This Prudential Standard requires an authorised deposit-taking institution engaging in activities that give rise to risks associated with potential movements in market prices to adopt risk management practices and hold regulatory capital that is commensurate with the risks involved.

The key requirements of this Prudential Standard are that an authorised deposit-taking institution must:

 have a framework to manage, measure and monitor market risk commensurate with the nature, scale and complexity of the institution's operations; and

 use the standard method or an APRA-approved internal model approach to determine the institution's capital requirement for market risk.