Revolving securitisation facilities, or master trusts, would be permitted under a revised prudential standard proposed by the Australian Prudential Regulation Authority.APRA released a discussion paper yesterday outlining the revised securitisation standard (APS 120), which includes a provision for facilities that would allow issuers of residential mortgage-backed securities and other asset-backed securities to sell securities from the same issuing trust.This would create multiple series secured by the same pool of mortgages or other receivables.The industry has campaigned for the inclusion of master trusts in the prudential standard for a long time, arguing that it would make the issuing process more efficient, give greater certainty to investors and reduce costs for issuers.It would also make it easier for issuers to offer bullet repayments, which have fixed maturity dates and no prepayment pass-through. This is a type of security that would appeal to a wide range of fixed interest investors.APRA said that issuers using master trusts would hold more assets in the securitisation vehicle than are needed to back the securities sold to investors.And for regulatory capital purposes APRA would follow the Basel Committee's recommendation that all securitised assets in master trusts be assessed as if they were on-balance sheet.The Australian Securitisation Forum said it was concerned with some of the details of APRA's proposed standard. It said APRA was proposing to place restrictions on how cash flows could be streamed in a master trust. This would make the structure less efficient than master trust arrangements operating in other markets.The ASF's chief executive, Chris Dalton, said the industry body was also concerned about a proposal to apply an additional capital charge to warehouse facilities that did not term out within 12 months.Dalton said: "We understand APRA's concern that small lenders don't use warehouses to rent a bank's balance sheet but we think this provision needs more flexibility."The other hot topic in the debate over APS 120 is APRA's intention to allow only two classes of securities - A notes and B notes. This is at odds with current industry practice, where issuers might have an RMBS structure that goes all the way down to F or G notes.APRA is keen to simplify securitisation structures. It said: "One of the main lessons from the crisis was that securitisation had become excessively complex. Globally, securitisation had evolved from its simplest originate-to-distribute form to more complex forms of credit (including synthetic credit)."In APRA's view, risk may be transferred in a more certain manner from issuers to investors in a structure with only two credit classes."However, APRA is proposing that a securitisation structure may possess multiple tranches within the A class, provided they rank equally for credit purposes. The regulator would allow for multiple sub-classes in the B class, as well."While securitisation may be viewed for prudential purposes as a two-credit class structure, in commercial terms an ADI [authorised deposit-taking institution] could structure as many mezzanine and junior or subordinated classes as it sees appropriate," APRA said.APRA said it would not finalise any change to APS 120