The Reserve Bank is introducing new eligibility criteria for securities to be accepted as collateral in
the Reserve Bank’s market operations.

• Floating rate notes (FRNs) and marketed asset-backed securities issued on or after 1 December
  2022 that reference BBSW must include robust fallback provisions
• All self-securitisations, regardless of the date of issue, must include robust fallback provisions.
  The Reserve Bank will engage directly with self-securitisation issuers and give at least
  12 months’ notice before enforcing this requirement.

Eligibility criteria for FRNs and marketed asset-backed securities issued before 1 December 2022
are unchanged. However, issuers should strongly consider including robust fallbacks for such securities,
depending on their length of time to maturity, as a matter of prudent risk management.

For full details of the new eligibility requirements see the Eligible Securities
Criteria.

These requirements are being introduced as part of global reforms to strengthen financial benchmarks
and ensure they are used appropriately in the financial system. Financial regulators globally have been
urging market participants to make financial products more robust by including fallback provisions to
apply if the referenced benchmark rate is discontinued.

The Reserve Bank thanks market participants and industry bodies, including the Australian Financial
Markets Association and Australian Securitisation Forum, who have engaged with the Reserve Bank and
provided feedback on this work.

RBA Assistant Governor (Financial Markets) Christopher Kent said, ‘These new requirements
– which have been flagged for some time – are an important step the RBA is taking to
encourage further benchmark reform. Fallbacks provide important insurance when using any benchmark. If
there’s one thing that LIBOR has shown us, it’s that we shouldn’t take existing
benchmarks for granted. Although BBSW is currently a robust benchmark, this could change in the future
so it is important that robust fallbacks are in place.’