Australian Prudential Regulation Authority general manager Pat Brennan made the rare admission yesterday that the regulator had "given up some prudential ground" in allowing bullet maturities in securitisation structures.The industry has been pushing the regulator to allow the use of bullet maturities to facilitate the marketing of securities to investors who baulk at the pass-through structure of standard mortgage-backed securities issues.In a pass-though structure principal repayments on the underlying mortgages are paid to investors along with interest but in a bullet structure no principal is rapid until a set date.The use of bullet maturities gives investors more certainty about the cash flows they will receive from their securities.Speaking at the Australian Securitisation Forum conference in Sydney yesterday, Brennan said: "Our concern is that a bullet maturity may, even if contractually in the form of an option for the issuer, create an expectation by investors and markets more generally that repayment will definitely occur on the stated date regardless of circumstances prevailing at the time."Brennan said APRA acknowledged the benefits of bullet maturity structures, which provide greater certainty of cash flow and are therefore more likely to attract a broader range of investors.And the benefit from the regulator's point of view is that "having a much larger funding-only market provides ADIs the opportunity to strengthen the balance sheet resilience by accessing new sources of term funding."Brennan said APRA was convinced by industry submissions in response to its first draft of securitisation standards last year that it was necessary to allow the market for bullet structures to grow."Please note that APRA is giving up some prudential ground here. Our concerns regarding optional call dates remain," Brennan said.APRA's latest draft of its securitisation standard, released last week, permits date-based call options in funding-only securitisations. However, there are some conditions: at no time can an ADI's senior exposure to a funding-only securitisation be subordinated for credit risk to other senior exposures; cash flows may be directed to other senior investors ahead of the ADI but only if the underlying assets are performing; and ADIs must not act or communicate in a way that implies the call date is anything but optional.Other speakers at the conference said APRA's position was something of a breakthrough.Ashurst partner Jennifer Schlosser said: "This is a success story about consultation, especially on the issue of date-based calls."Suncorp Bank's executive general manager funding, Simon Lewis, said APRA's date-based call ruling presented the industry with a big opportunity."It increases the universe of real money investors," Lewis said.