The Australian Securitisation Forum has urged the Australian Prudential Regulation Authority to use an internal ratings-based approach in assessing the securitisation exposures of banks.In a submission to APRA following the release of the latest set of draft securitisation standards (APS 120) in November, the ASF said it was concerned that the major banks' appetite for investment in securitised assets may be curtailed if capital costs are increased, It argued that the internal ratings-based approach would give banks the greatest flexibility as assessing their exposures when assigning regulatory capital.The submission said: "The overall health of the Australian securitisation market is, in the near term, sensitive to the impact that changes to APS 120 could have on major bank capital requirements."The combined effect of the Reserve Bank's Committed Liquidity Facility and the withdrawal of foreign banks following the GFC has resulted in the Australian securitisation market becoming highly dependent upon the major banks in funding smaller ADI and non-bank lenders."Among other points raised in the submission, the ASF wants APRA to enhance international harmonisation in its regulations, including more mutual recognition and the recognition of securitised assets as high quality liquid assets.APRA issued a first daft of the revised standard in 2014 and a second draft last November.The most recent draft was well received, with industry participants describing it as clearer and more flexible. APRA's aim is to simplify securitisation structures. It said one of the lessons of the financial crisis was that securitisation structures had become too complex and this had introduced risks into the market.The most recent draft dispensed with a risk retention requirement, allowed more flexibility in funding-only securitisation, and removed explicit references to warehouse arrangements.