#basel 111

Terms deposits in Australia that are easily "breakable" are regulated less than others and classified as Basic Deposit Products, not requiring product disclosure statements and other consumer protections as required by the Corporations Act.

  On the other side, "breakable" deposits will count less highly for bank liquidity levels under Basel III than "unbreakable" deposits, so the Australian Securities & Investments Commission is looking for a way to allow more deposits to be "unbreakable" while still qualifying as BDPs.

  ASIC, which has consumer protection oversight, is the third regulator in Australia involved in Basel III, behind the Reserve Bank and the Australian Prudential Regulation Authority. The latter's chairman, John Laker, will issue a discussion paper on Basel III before Christmas, which he recently stated would make no concessions to the current weakness of global banking markets.

  ASIC yesterday issued a consultation paper suggesting forms of relief from the Corporations Act that may be made available to banks planning to accept those "unbreakable" deposits, mostly relating to the amount of information that depositors are given before they hand their money over. If enough information is given to depositors making it clear their money would be locked up for a fixed period, then the banks would not be forced to issue PDSs and adhere to higher staff trading standards as the act requires.