Changes To The EMIR Margining Requirements – Finance and Banking

European Union:

Changes To The EMIR Margining Requirements

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On 4 May, 2020, the European Supervisory Authorities (the
ESAs“) published a revised version of
the draft regulatory technical standards amending
the Delegated Regulation1 on risk mitigation techniques
for non-centrally cleared OTC derivatives (bilateral margining)
under EMIR2 (the “RTS“).

The former version of the revised RTS had been published on the
website of the ESAs on 5 December 20193. However, in
response to the Covid-19 outbreak, the ESAs have updated the RTS to
take into account the related decision from the Basel Committee on
Banking Supervision (“BCBS“) and the
International Organisation of Securities Commissions
(“IOSCO“) to defer by one year the
implementation of the remaining phases of the initial margin

The revised RTS confirms:

  • Covered counterparties, including Irish funds, with an
    aggregate average notional amount
    (“AANA“) of non-centrally cleared
    derivatives above €50 billion (each a “Phase 5
    “) will become subject to the requirement
    to exchange initial margin from 1 September 2021, whilst
    counterparties with an AANA of non-centrally cleared derivatives
    above €8 billion (each a “Phase 6
    “) will become subject to the requirement
    from 1 September 2022. The AANA calculation window for each of
    Phases 5 and 6 is also deferred by one year.

  • The derogation from the requirement to exchange variation
    margin for single equity and index options is deferred until 4
    January 2021.

  • The derogation from the requirement to exchange initial margin
    for intragroup transactions within groups with third-country
    entities is deferred until 20 December 2020.

  • The exemption from the mandatory exchange of variation margin
    in respect of physically-settled FX forwards and swaps between
    institutions and end-users where at least one of the counterparties
    is not a credit institution or a MiFID investment firm (or any
    third country equivalent).Therefore, the variation margin
    requirement does not apply to funds.

This revised version of the RTS has now been submitted by the
ESAs to the European Commission for endorsement in the form of a
Commission Delegated Regulation. Once endorsed, the RTS are subject
to non-objection by the European Parliament and the Council.


1 Commission Delegated Regulation (EU) No 2016/2251 of 4
October 2016.

2 European Market Infrastructures Regulation – Regulation
(EU) 648/2012 of the European Parliament and Council on OTC
derivatives, central counterparties and trade

3 Final Report: EMIR RTS on various amendments to the
bilateral margin requirements in view of the international
framework (ESAs 2019 20).

4 Link to the BCBS and IOSCO statement from 3 April 2020:…

Originally published June 03, 2020

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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