The liquidity risk appetite is supported by a number of risk  tolerances and management principles Macquarie applies to  oversee liquidity risk in both MGL and MBL: scenario projections and complies with regulatory minimum  requirements. To determine the minimum level of liquid assets, reference  is made to the expected minimum cash requirement during  a combined market-wide and firm-specific crisis scenario  over a 12 month timeframe. This scenario assumes no  access to new funding sources, a significant loss of deposits  and contingent funding outflows resulting from undrawn  commitments, market moves impacting derivatives and other  margined positions. The size of the liquid asset portfolio  must exceed the minimum requirement as calculated in this  model at all times. The liquid asset portfolio contains only unencumbered  assets that can be relied on to maintain their liquidity in  a crisis scenario. At least 90 per cent of the liquid asset  portfolio held to meet the minimum liquid asset requirement  must be eligible for repurchase with a central bank, either by  Macquarie or other counterparties. The remainder must be  approved by Group Treasury and RMG before inclusion in  the liquid asset portfolio. As at 31 March 2014, 97 per cent  of the liquid asset portfolio was eligible for repurchase with a  central bank. The liquid asset portfolio typically includes unencumbered  cash and central bank repo eligible government, semi- government, supranational, government guaranteed bank  and unguaranteed bank securities and AAA rated Australian  residential mortgage backed securities. In addition, the  portfolio includes other very short dated, high quality liquid  assets such as A-1+ rated Australian residential mortgage  backed securities. The liquid asset portfolio is largely denominated and held  in Australian dollars although liquid assets denominated in  US dollars or other currencies are held where appropriate. Group Treasury maintains a liquidity contingency plan.  The liquidity contingency plan applies to the entire Macquarie  Group and defines roles and responsibilities and actions to  be taken in a liquidity event. This includes identification of key  information requirements and appropriate communication  plans with both internal and external parties. Specifically, the plan details factors that may constitute a  crisis, the officer responsible for enacting the contingency  management, a committee of senior executives who would  be responsible for managing a crisis, the information required  to effectively manage a crisis, a public relations strategy, a  high level check list of possible actions to conserve or raise  additional liquidity and contact lists to facilitate prompt  communication with all key internal and external  stakeholders. The liquidity contingency plan is subject to  regular review (at least annually) by both Group Treasury and  RMG and is submitted to the Board for approval. Macquarie is a global financial institution, with branches and  subsidiaries in a variety of countries. Regulations in certain  countries may require some branches or subsidiaries to have  specific local contingency plans. Where that is the case, the  liquidity contingency plan contains a supplement providing  the specific information required for those branches or  subsidiaries.  Group Treasury maintains a portfolio of highly liquid  unencumbered assets in both MGL and MBL to ensure  adequate liquidity is available in all funding environments,  including worst case wholesale and retail market conditions.  The minimum liquid asset requirement is calculated from  The scenarios separately consider the requirements of the  Banking Group, Non-Banking Group and the Consolidated  Entity. They are run over a number of timeframes and a  range of conservative assumptions are used including  access to capital markets, deposit outflows, contingent  funding requirements and asset sales. Scenario analysis is central to Macquarie's liquidity risk  management framework. Group Treasury models a number  of liquidity scenarios covering both market wide and firm- specific crises. The objective of this modelling is to ensure  the ability of MGL and MBL to meet all repayment obligations  under each scenario and determine the capacity for asset  growth. Risk Tolerances  LiquidityManagement Principles  Liquidity contingency plan Liquid asset holdings Scenario analysis 35  GLYPH<150> term assets must be funded by term liabilities  cash and liquid assets are sufficient to cover a 12  month stress scenario  GLYPH<150> cash and liquid assets held to meet stress scenarios  must be unencumbered liquid assets and cash  GLYPH<150> short-term assets exceed short term wholesale liabilities  diversity and stability of funding sources is a key priority  GLYPH<150> balance sheet currency mismatches are managed  within set tolerances  GLYPH<150> funding and liquidity exposures between entities in the  Macquarie Group are subject to constraints where  required.  GLYPH<150> Macquarie has a centralised approach to liquidity  management  GLYPH<150> liquidity risk is managed through stress scenario  analysis and setting limits on the composition and  maturity of assets and liabilities  GLYPH<150> a Regional Liquidity Framework is maintained that  outlines Macquarie's approach to managing funding  and liquidity requirements in offshore subsidiaries and  branches  GLYPH<150> the liquidity position is managed to ensure all obligations  can be met as required on an intraday basis  GLYPH<150> a Liquidity Contingency Plan is maintained that provides  an action plan in the event of a liquidity 'crisis'  GLYPH<150> a funding strategy is prepared annually and monitored  on a regular basis  GLYPH<150> internal pricing allocates liquidity costs, benefits and  risks to areas responsible for generating them  GLYPH<150> strong relationships are maintained to assist with  managing confidence and liquidity  GLYPH<150> the MBL and MGL Boards and senior management  receive regular reporting on Macquarie's liquidity  position, including compliance with liquidity policy and  regulatory requirements. 