Eligible financial collateral under the Eligible financial collateral under the simple approach

Eligible financial collateral under the simple approach

1. An ADI using the simple approach may only recognise the following items as eligible financial collateral:
   1. cash collateral (cash, certificates of deposit and bank bills issued by the ADI) on deposit with the ADI;[20]
   2. gold bullion;
   3. debt securities rated by an ECAI that have a credit rating grade of either:
      1. four (or better) for long-term securities issued by sovereigns;[21] or
      2. three (or better) for short-term or long-term securities issued by other counterparties;
   4. debt securities not rated by an ECAI where:
      1. the securities are issued by a bank as senior debt and are listed on a recognised exchange;
      2. all rated issues of the same seniority by the issuing bank have a long-term or short-term credit rating grade of at least three; and
      3. the ADI holding the security has no information suggesting that the security justifies a rating below this level;
   5. senior securitisation exposures, as defined in APS 120, with an external credit rating grade of one;
   6. units in a listed or unlisted trust where:
      1. the unit price of the trust is publicly quoted on a daily basis;
      2. the trust is limited to investing in the instruments detailed in paragraphs 14(a) to 14(e) of this Attachment;[22] and
      3. for unlisted trusts, the ADI can redeem its investment within three business days.
2. Resecuritisation exposures, as defined in APS 120, are not eligible financial collateral.