The Australian Prudential Regulation Authority (APRA) has released the second of two discussion papers setting out its proposed prudential response to the adoption of International Financial Reporting Standards (IFRS) by APRA-regulated institutions. The new paper deals with the treatment of eligible Tier 1 capital instruments and securitisation for authorised deposit-taking institutions (ADIs) and general insurers.

APRA has also taken the opportunity to introduce more flexibility into its
approach to innovative capital by allowing innovative Tier 1 capital instruments to be issued directly and removing the requirement that directly issued instruments be subject to mandatory conversion. These
changes will allow mutually owned institutions, such as building societies and credit unions, greater access to capital.