EMIR Bilateral Margin: The Draft RTS Releasing Initial Margin

On 3 August 2026 the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority, acting together as the ESAs, sent the European Commission a final report and a set of draft regulatory technical standards that rewrite one paragraph of the EMIR bilateral margin requirements. The paragraph is Article 28(1) of Commission Delegated Regulation (EU) 2016/2251, and the rewrite matters most to counterparties sitting at or near the EUR 8 billion initial margin threshold for uncleared over-the-counter derivatives.

Under current Article 28(1), counterparties may provide in their risk-management procedures that initial margin is not collected for new non-centrally cleared OTC derivative contracts where one counterparty is below the EUR 8 billion threshold; existing contracts do not benefit from that derogation. The draft RTS would permit the derogation to extend to existing contracts. If counterparties choose to apply it, initial margin would not be collected for the relevant contracts and initial margin already collected on outstanding contracts would be released. Variation-margin requirements are not amended.

The change is a proposal, not law. It has gone to the Commission for endorsement and still has to clear scrutiny by the European Parliament and the Council before it can be published in the Official Journal. For firms below or close to the threshold, the near-term question is whether they would use the wider derogation, and how they would unwind existing initial margin and custody arrangements in an orderly way if they do.

Related reading: EMIR Initial Margin Reporting

What the draft EMIR bilateral margin RTS would change

Delegated Regulation (EU) 2016/2251 is the RTS on risk-mitigation techniques for OTC derivative contracts not cleared by a central counterparty. The ESAs developed it under Article 11(15), first subparagraph, points (a), (b) and (c) of Regulation (EU) No 648/2012, the European Market Infrastructure Regulation. It sets the level of collateral that counterparties to bilateral derivatives must maintain, the type of collateral, and the segregation arrangements that go with it.

Article 28(1) of that Regulation currently lets counterparties provide, in their risk-management procedures, that initial margins are not collected for all new OTC derivative contracts entered into within a calendar year, where one of the two counterparties has an aggregate month-end average notional amount of non-centrally cleared OTC derivatives below EUR 8 billion. The word doing the work is “new”. Existing trades stay inside the initial margin regime for their whole life, even after a counterparty has fallen under the threshold.

The draft RTS replace Article 28(1) so that the derogation covers both limbs of the relationship. Where one of the two counterparties has an AANA below EUR 8 billion, initial margins are not collected for the non-centrally cleared OTC derivatives between them, and initial margins already collected on outstanding contracts are released. Where both counterparties are above EUR 8 billion, they collect initial margin only for new contracts entered into between them. The ESAs describe the current split, where new trades escape initial margin but existing trades do not, as a burden that runs for the length of those contracts and forces firms to keep initial margin calculation, exchange and custodial relationships alive with no matching treatment for their new business.

There is a second reason the ESAs give: alignment. Regimes in several other jurisdictions already release existing contracts from initial margin once a counterparty falls below the threshold. Keeping the EU narrower creates complexity for cross-border books and, on the ESAs’ reading, a level-playing-field problem, because it nudges firms toward counterparties in jurisdictions that exempt existing trades. The ESAs describe the amendments as supporting their broader objectives of simplification and burden reduction.

The EUR 8 billion threshold, and what it measures

The threshold is an aggregate month-end average notional amount, calculated on the month-end notional of non-centrally cleared OTC derivatives for March, April and May of a given year. That average decides the treatment for the following period. The calculation is made at counterparty level or, where the counterparty belongs to a group, at group level. Under Article 28(2), the group calculation includes all non-centrally cleared OTC derivative contracts of the group, including intragroup contracts counted once. Under Article 28(3), qualifying UCITS and AIFs are treated as distinct entities where they are segregated pools and are not collateralised, guaranteed or otherwise financially supported by other funds or their managers.

Two features of the trigger are easy to misread. First, only one of the two counterparties needs to be below EUR 8 billion for the exemption to bite. A smaller buy-side firm facing a large dealer that is well above the threshold still reaches the exemption, because the test is met on its own side of the relationship. Second, the ESAs state that the EUR 8 billion threshold is aligned with the BCBS-IOSCO margin framework and that the March-to-May AANA period follows the international standard.

A common confusion is worth heading off. The EUR 8 billion initial margin threshold in Article 28 is a different measure from the EMIR clearing thresholds. The ESAs made this point directly in response to a stakeholder query: the clearing thresholds are set by asset class of OTC derivative, while the Article 28 threshold looks at all uncleared OTC derivatives at group level. A firm can be below one and above the other. If your reporting and collateral teams share a single “EMIR threshold” spreadsheet, that is where the two get quietly merged. For the mechanics of the trade-level obligations that sit alongside margining, our EMIR reporting guide keeps the two regimes separate.

How the timing would work

The draft RTS keep the existing rhythm on the way into the regime and speed up the exit. Read against Article 36 of Delegated Regulation (EU) 2016/2251, the mechanics run like this:

• AANA reference period: the month-end averages for March, April and May of a given year (call it year X) determine whether a counterparty is above or below EUR 8 billion.
• As early as 1 June of year X: where one counterparty is below the threshold on that calculation, initial margin can stop applying to all uncleared OTC derivatives between the two counterparties from 1 June of the same year.
• No later than 1 January of year X+1: where both counterparties are above the threshold, initial margin applies to new contracts from 1 January of the year following the reference period.
• Submission to the Commission: 3 August 2026, when the ESAs published the final report (ESA 2026 07) and sent the draft RTS for endorsement.
• Entry into force: the twentieth day following publication in the Official Journal, once the instrument is adopted.

The two dates are not symmetric, and that asymmetry is intentional. A counterparty that has just crossed above EUR 8 billion gets until 1 January of the next year to build the operational machinery for initial margin, which is the harder direction to move in. A counterparty that has dropped below can act from 1 June of the same year. Firms retain the option to move more slowly than the calendar allows: the ESAs note that a below-threshold counterparty may delay ceasing collection, and may keep collecting initial margin at any time if it prefers, just as an above-threshold counterparty is free to start collecting before 1 January. The dates are outer bounds on the change of status, not instructions to flip a switch on a fixed day.

Initial margin only, and only if you opt in

The press release headline talks about “bilateral margin requirements”, which can read wider than the change is. The amendment touches initial margin under Article 28 and nothing else in the collateral stack. Variation margin obligations, which cover the current mark-to-market exposure of a position, are outside the amendment and continue to apply on the same terms. So do Article 25’s minimum-transfer-amount rules, under which the agreed amount cannot exceed EUR 500 000, and Article 29’s initial-margin reduction of up to EUR 50 million where neither counterparty belongs to a group or the counterparties belong to different groups, and up to EUR 10 million where both belong to the same group. None of those provisions is amended.

The derogation is also permissive, which changes how a compliance team should read it. Article 28 lets counterparties “provide in their risk-management procedures” that initial margin is not collected. It does not order them to stop. A firm that would rather keep exchanging initial margin on a particular relationship, for its own credit-risk reasons, can carry on. The ESAs confirmed in stakeholder feedback that counterparties are free not to apply the derogation, and that those who do apply it are free to set out how the release of already-collected initial margin should happen, so it can run in an orderly manner in line with contractual terms and operational readiness. The rule opens a door; it does not push firms through it.

One more boundary is worth stating plainly, because it is a frequent source of scope creep. The amendment is confined to the margining framework. It does not amend Article 9 EMIR or any MiFIR reporting provision. Whether a contract must be reported, and which entity is responsible for reporting it, remains governed by those provisions, including any applicable exemption or allocation of reporting responsibility.

The equity options cleanup buried in the same RTS

The draft RTS carry a second, smaller amendment that is easy to miss. Regulation (EU) 2024/2987, known as EMIR 3, inserted a new Article 11(3a) into EMIR that exempts single stock options and equity index options not cleared by a CCP from the risk-management procedures requiring the timely, accurate and appropriately segregated exchange of collateral. Delegated Regulation (EU) 2016/2251 still carried transitional arrangements for those same products, written before EMIR 3 settled the point at Level 1. The draft RTS delete Article 38(1) to remove the outdated transitional text.

The deletion does not change the treatment of those options. Single stock options and equity index options remain exempt from margin requirements, because the exemption now lives in Article 11(3a) of EMIR itself. Removing the old transitional language is housekeeping that stops the Level 2 text from contradicting the Level 1 position. It is the kind of correction that only matters when someone reads the delegated regulation in isolation and mistakes a deleted transitional clause for a change in substance.

Where the proposal sits, and why there was no public consultation

The instrument is at the draft stage of the Level 2 process. The ESAs have submitted the final report and the draft RTS to the Commission for endorsement in the form of a Commission Delegated Regulation. After the Commission adopts it, the text goes to the European Parliament and the Council, which have a non-objection period before it can be published in the Official Journal. Only then does the twenty-day clock to entry into force start. There is no Official Journal citation yet, and no date on which the wider exemption becomes available.

The ESAs used a fast-track route rather than an open public consultation. They treated the change as a limited adjustment of an existing framework and judged a full consultation and cost-benefit analysis disproportionate to its scope. Instead, they sought the opinions of the three ESAs’ stakeholder groups, the Banking Stakeholder Group, the Insurance and Reinsurance Stakeholder Group and the Occupational Pensions Stakeholder Group, and the Securities and Markets Stakeholder Group, consulted in parallel over roughly one month. The feedback was largely supportive, and the ESAs made no changes to the draft as a result. For anyone tracking the file, that matters in a practical way: there is no public consultation window to respond to, and the text that reaches the Commission is the text the ESAs published.

Preparing for a rule that is not yet law

Because the derogation is optional and not yet in force, the sensible preparation is analysis rather than build. A firm below or near EUR 8 billion can start by confirming its own AANA position for the March-to-May window and identifying the counterparties where it currently posts or collects initial margin only because of legacy trades. Those are the relationships where the amendment, if adopted, would change the daily workload.

From there the questions are commercial and operational as much as regulatory. Would the firm actually apply the derogation on a given relationship, or keep initial margin in place for credit-risk comfort. If it applies the derogation, how would already-collected initial margin be released from segregated custody accounts without breaching the contractual documentation that governs those accounts. Which credit support annexes and collateral schedules would need repapering, and on what timetable. None of that has to be executed before the RTS is adopted, but the mapping is cheaper to do now than under a compressed timeline once an Official Journal date lands.

Frequently Asked Questions

Does the wider exemption apply automatically once a counterparty falls below EUR 8 billion?

No. Proposed Article 28(1) would allow counterparties to provide for the derogation in their risk-management procedures; it would not require them to use it. The ESAs state that counterparties may choose not to apply the derogation and may continue exchanging initial margin.

If our firm is below the threshold but our dealer counterparty is far above it, does initial margin still stop between us?

Potentially, but not automatically. Proposed Article 28(1)(a) is available where either counterparty has an AANA below EUR 8 billion. Counterparties may choose whether to apply the derogation in their risk-management procedures and may continue exchanging initial margin.

What happens to initial margin already sitting in a segregated custody account once we apply the derogation?

The draft text provides that initial margin collected on outstanding contracts is released. The ESAs have said counterparties are free to set out how that release happens, so it can be sequenced in an orderly way that fits the contractual terms and the operational readiness of both parties, rather than unwound overnight.

Does this affect variation margin or Article 29’s initial-margin deduction thresholds?

No. The amendment is confined to the Article 28 derogation. Variation margin, Article 25 minimum-transfer-amount rules and Article 29’s EUR 50 million or EUR 10 million deduction thresholds are unchanged.

Does the exemption change our EMIR trade reporting?

No. The draft RTS do not amend Article 9 EMIR or any MiFIR reporting provision. Whether a contract must be reported, and who must report it, remains governed by the applicable reporting rules and exemptions.

If we later rise back above EUR 8 billion, must we re-collect initial margin on the trades we released?

On the face of the proposed text and the BCBS-IOSCO approach it follows, initial margin would apply to new contracts entered from the following 1 January, not to the previously exempt existing trades. The framework applies initial margin to new business on entering the regime rather than requiring collateral to be rebuilt on legacy contracts. Firms should confirm the position against the adopted text once it is published.

When could the amended rule realistically apply?

There is no fixed date. The draft RTS must be adopted by the Commission, survive the European Parliament and Council non-objection period, and be published in the Official Journal, after which it enters into force on the twentieth day. Any planning assumption should treat the timing as open until an Official Journal citation exists.

Related Articles

• EMIR Initial Margin Reporting: how the initial margin model and threshold monitoring feed EMIR obligations.
• EMIR Reporting Explained: the trade-reporting duties that sit alongside the margin framework.
• MiFIR Transaction Reporting: the separate transaction-reporting regime that margining changes do not touch.
• EBA Supervisory Reporting Simplification: the wider burden-reduction agenda this amendment forms part of.
• MiCAR Reporting Obligations: another EU framework where scope and threshold tests decide who reports what.

Key Takeaways

• The draft RTS (ESA 2026 07, submitted to the Commission on 3 August 2026) would extend the Article 28(1) EMIR initial margin exemption to existing uncleared OTC trades, not only new ones.
• The trigger is unchanged in shape: only one of the two counterparties needs an AANA below EUR 8 billion, measured on the March, April and May month-end averages.
• Initial margin already collected on outstanding contracts would be released once the derogation is applied.
• The derogation is permissive. Counterparties may keep exchanging initial margin, and can decide how to sequence any release.
• Timing is asymmetric: the exemption can apply from as early as 1 June, while re-entry when both sides are above the threshold runs no later than 1 January of the following year.
• Variation margin, the Article 25 minimum-transfer-amount cap of EUR 500 000, Article 29’s EUR 50 million or EUR 10 million deduction thresholds, and EMIR reporting rules are not amended.
• The RTS also delete the outdated Article 38(1) transitional text for equity options, which remain exempt under Article 11(3a) of EMIR as amended by EMIR 3.
• It is not yet in force: adoption by the Commission, non-objection by the Parliament and Council, and Official Journal publication all come first, with entry into force twenty days later.

Sources and References

• EBA, EIOPA and ESMA, press release, “EBA, EIOPA and ESMA propose amendments to bilateral margin requirements”, 3 August 2026: eba.europa.eu
• ESAs Final Report, “Final draft amending RTS on uncleared OTC derivatives with regard to initial margin requirements applicable to counterparties that fall below the threshold” (ESA 2026 07): EBA copy (PDF) and ESMA copy (PDF)
• Commission Delegated Regulation (EU) 2016/2251 of 4 October 2016 (RTS on risk-mitigation techniques for uncleared OTC derivatives), OJ L 340, 15.12.2016, p. 9: eur-lex.europa.eu
• Regulation (EU) No 648/2012 of 4 July 2012 (EMIR), OJ L 201, 27.7.2012, p. 1: eur-lex.europa.eu
• Regulation (EU) 2024/2987 of 27 November 2024 (EMIR 3): eur-lex.europa.eu

What sits with the Commission now

The substance of the change is settled on the ESAs’ side: extend the Article 28 initial margin exemption to existing contracts, release the collateral already collected, and clear away the stale equity-options transitional text. What is not settled is when any of it applies, because that now depends on the Commission’s endorsement and the Parliament and Council non-objection period. Below-threshold counterparties do not need to repaper anything yet, but the useful work starts before the Official Journal date arrives: identify the relationships where legacy trades are the only reason initial margin still moves, decide whether the derogation is worth applying on each one, and set out how released collateral would leave segregated custody without breaking the documentation that put it there. Watch for the adopted Commission Delegated Regulation and its entry-into-force date; that is the point at which the analysis has to become a plan.

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