The European Supervisory Authorities (EBA, EIOPA and ESMA) have proposed amendments to the EU's bilateral margin requirements that would exempt counterparties below the €8 billion threshold from exchanging initial margin on both new and existing uncleared over-the-counter (OTC) derivative contracts. In a final report and draft Regulatory Technical Standards (RTS) published on 3 August 2026, the three authorities recommend simplifying the framework set out in the European Commission's Delegated Regulation (EU) 2016/2251, which currently requires such counterparties to continue exchanging initial margin on contracts entered into before they fell below the threshold. The proposed changes would eliminate that legacy obligation, aligning the treatment of existing contracts with the exemption already applied to new ones, and would bring the EU closer to practices in other jurisdictions.
The amendments respond to requests from market participants and form part of the ESAs' broader simplification and burden-reduction agenda. Under the current rules, counterparties below the €8 billion threshold—set by the European Market Infrastructure Regulation (EMIR)—are exempt from exchanging initial margin for new uncleared OTC derivatives but must still post margin on contracts that predate their status change. The proposal would remove that distinction, meaning firms below the threshold would no longer exchange initial margin for any contracts, new or existing. The ESAs argue this reduces complexity and compliance costs for smaller counterparties while maintaining consistency with international standards.
The draft RTS has been submitted to the European Commission for endorsement. Following the Commission's review and adoption, the text will be scrutinised by the European Parliament and the Council before publication in the Official Journal of the European Union. The proposal is the latest in a series of EU efforts to streamline post-crisis derivatives regulation, following earlier adjustments to clearing and margining rules under EMIR. The changes are expected to benefit smaller financial institutions and non-financial counterparties that trade uncleared derivatives, lowering their operational and capital burdens. However, they also reduce the collateral protection available to larger counterparties trading with these firms, potentially increasing credit risk in the bilateral derivatives market. The ESAs have not indicated a timeline for the Commission's decision, but the formal adoption process will determine when the amendments take effect.