The Australian Securities & Investment Commission (ASIC) has released a consultation paper on proposals to allow banks and non-banks to issue term deposits that are only breakable on 31 days’ notice, as part of moves by Australia’s financial services sector to meet new global liquidity standards.

 

Basel III liquidity standards aim to promote more resilient banking sectors, including improving sectors’ ability to absorb shocks arising from financial and economic stress.

 

Term deposits for up to two years issued by authorised deposit-taking institutions (ADIs) that are only breakable on 31 days’ notice would achieve recognition of the 31-day term under the Basel III liquidity standards.

Relief may be required due to potential regulatory uncertainty about whether such term deposits would qualify as basic deposit products under the Corporations Act 2001 (the Corporations Act).

Consultation Paper 169 Term deposits that are only breakable on 31 days' notice: Proposals for relief (CP 169) outlines the relief and the conditions of relief under consideration by ASIC.

‘The conditions under consideration seek to ensure investors are provided with adequate disclosure about the new form of term deposit, leading to confident and informed consumers,’ ASIC Commissioner, Dr Peter Boxall, said.

Download Consultation Paper 169 Term deposits that are only breakable on 31 days' notice: Proposals for relief (CP 169)