The European Supervisory Authorities have published a final report proposing amendments to simplify bilateral margin requirements for counterparties below the €8 billion threshold, supporting phase-out and consistency.
The European Supervisory Authorities (EBA, EIOPA, and ESMA) have published a final report on draft Regulatory Technical Standards (RTS) proposing to simplify the bilateral margin requirements of the European Commission’s Delegated Regulation (EU) 2016/2251.
The proposed amendments aim to simplify the bilateral margin framework for counterparties subject to initial margin requirements and below the €8 billion threshold for exchanging initial margin under the European Market Infrastructure Regulation (EMIR). The changes are intended to facilitate the phase-out of initial margin requirements for these counterparties and promote greater consistency with other jurisdictions.
Currently, counterparties below the threshold are exempt from exchanging initial margin for new uncleared OTC derivative contracts but must exchange initial margin for existing contracts. The amendments propose that counterparties below the threshold will no longer be required to exchange initial margin for either new or existing contracts.
The amendments respond to market participant requests and support the ESAs’ objectives of simplification and burden reduction.
The Final Report has been submitted to the European Commission for endorsement. After review and adoption by the Commission, the RTS will undergo scrutiny by the European Parliament and the Council before publication in the Official Journal of the European Union.
