EBA, EIOPA, and ESMA Propose Changes to Bilateral Margin Requirements

On August 3, 2026, the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Securities and Markets Authority (ESMA) published a final report on the Regulatory Technical Standards (RTS). They proposed simplifying the bilateral margin requirements of the Delegated Regulation (EU) 2016/2251 of the European Commission. These changes are intended to facilitate the phased elimination of the initial margin requirements for counterparties below the €8 billion threshold, as expected by the European Market Infrastructure Regulation (EMIR). They also seek greater consistency with the treatment applied in other jurisdictions.

New Exemption for Non-Cleared Contracts

Under the current framework, counterparties below the threshold are not required to exchange initial margin for new non-cleared OTC derivatives contracts but are for existing contracts. With the proposed amendments, counterparties will no longer be obligated to exchange initial margin for either new or existing contracts if they fall below the threshold. These amendments respond to requests from market participants and support the broader goals of authorities for simplification and burden reduction.

Legislative Process

The final report has been submitted to the European Commission along with the draft RTS for approval. Following the review and adoption process by the Commission, the RTS will be subject to scrutiny by the European Parliament and the Council before being published in the Official Journal of the European Union.

Context

These measures reflect a continuing effort by authorities to align regulatory frameworks with international practices and reduce unnecessary burdens on counterparties involved in OTC derivatives. The elimination of the obligation to exchange initial margin creates a more efficient and less restrictive environment for counterparties that do not exceed the specified threshold, promoting regulatory harmonization across diverse jurisdictions.

For more information, contact Tayfun Yilmaz, ESMA Communications Officer, at [email protected].

The publication of the final report marks a significant step towards adopting a more modern and simplified approach to regulating complex financial products. This initiative aligns within a broader regulatory framework that seeks to balance financial stability with market flexibility.