EBA, EIOPA, and ESMA propose amendments to bilateral margin requirements

The European Supervisory Authorities (EBA, EIOPA, and ESMA) have published a final report on draft Regulatory Technical Standards (RTS) proposing amendments 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 that are below the €8 billion threshold specified in the European Market Infrastructure Regulation (EMIR). These changes are intended to facilitate the phase-out of initial margin requirements for such 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 still exchange margin for existing contracts. The proposed amendments would eliminate the requirement to exchange initial margin for both new and existing contracts for these counterparties.

The amendments respond to market participant requests and support the ESAs’ objectives of simplification and burden reduction.

Next steps include submission of the final report and draft RTS 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.