The European Banking Authority (EBA) has launched a consultation on a new reporting framework to support the validation and ongoing monitoring of initial margin models based on the Standard Initial Margin Model (SIMM) developed by the International Swaps and Derivatives Association (ISDA). The proposed requirements, published on 5 August 2026, aim to provide the EBA with the information needed to fulfil its role as central validator of pro forma models under the European Market Infrastructure Regulation (EMIR), while keeping compliance costs proportionate for reporting entities. The consultation is open until 2 November 2026.
The framework would require counterparties seeking validation to use ISDA SIMM to submit regular, standardised information on the use and performance of their initial margin models. This data would also underpin the calculation of annual fees associated with model validation. A central feature is proportionality: firms with less significant OTC trading activity would face substantially lighter reporting obligations, with reporting required only once a year. The EBA intends to adopt a Decision by the end of 2026, with the first reporting reference date expected in December 2027 and data collection in the first quarter of 2028. The requirements will be incorporated into the EBA technical package version 4.4, Phase 2, with the final package expected in March 2027.
The consultation follows the EBA's assumption of the central validation function on 1 March 2026, a mandate introduced by EMIR 3 (Regulation (EU) 2024/2987), which amended EMIR to require central validation of pro forma models used for initial margin calculations. ISDA SIMM qualifies as such a model under Article 11(12a) of EMIR. The proposal builds on the EBA Decision on arrangements for the Initial Margin Model Validation function (EBA/DC/610) and the related Delegated Act on fees, and is designed to support competent authorities in their authorisation and supervision of ISDA SIMM-based models.
The reporting framework will affect several stakeholders. For banks and other financial counterparties using ISDA SIMM, the new requirements introduce ongoing compliance obligations, though the proportionality measures aim to limit the burden on smaller firms. The EBA and national competent authorities will gain consistent, high-quality data to monitor model performance and validate compliance, enhancing oversight of non-cleared OTC derivatives. The annual fees tied to validation will be calculated based on the reported information, directly impacting the cost of using ISDA SIMM. The framework also supports the broader stability of the EU financial system by ensuring that initial margin models remain robust and accurately reflect risk, though it adds a layer of regulatory reporting that firms must integrate into their existing processes.