EBA, EIOPA and ESMA propose amendments to bilateral margin requirements
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The three European Supervisory Authorities submit to the Commission draft RTS simplifying bilateral margining for uncleared OTC derivatives. Counterparties below the €8 billion EMIR threshold would no longer exchange initial margin on either new or existing contracts.
Key points
- Currently only new contracts are exempt, not existing ones
- Aligns the EU treatment with other jurisdictions
- Responds to market requests and the simplification agenda
Who is affected
Uncleared OTC derivative counterparties: banks, insurers, funds and corporates
Deadlines
Pending Commission adoption and non-objection by Parliament and Council
Plain-language version
Derivatives are contracts whose value depends on something else, like an interest rate. When signed directly between two parties, each posts collateral (initial margin) in case the other defaults. The EBA, EIOPA and ESMA, the EU authorities that watch over banks, insurers and markets, propose that firms below 8 billion euros in activity no longer have to post it, including on existing contracts.
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Summary produced with artificial intelligence from the official publication. It may contain errors: always check the original document.
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