The starting point for determining the fee is to make use of the spread between the yields on HQLA securities and the collateral that the banks hold for the CLF. This collateral is all eligible for the RBA's market operations, and is mainly the banks' self-securitised residential mortgage backed securities. We have estimated that this spread was around 90 basis points earlier this year.
But the higher yield on CLF collateral reflects compensation for a variety of risks. In particular, a sizeable share of the spread owes to the higher credit risk on these securities. However, the CLF fee should only reflect the liquidity risk component of the spread, and that is very difficult to identify separately.