The three European Supervisory Authorities have published a final report proposing draft Regulatory Technical Standards that would release counterparties below the €8 billion initial margin threshold from exchanging collateral on both new and existing uncleared OTC derivative contracts.

The EBA, EIOPA and ESMA — acting through their Joint Committee — submitted the final report to the European Commission on 3 August 2026, together with the draft RTS amending the bilateral margin framework set out in the Commission's Delegated Regulation (EU) 2016/2251. The document reference is ESA 2026 07.

What changes

The current framework draws a line between new and legacy trades. Counterparties whose aggregate notional exposure falls below the €8 billion threshold specified in the European Market Infrastructure Regulation (EMIR) are exempt from exchanging initial margin on new uncleared OTC contracts. They must, however, continue to post initial margin on contracts entered into before they fell below the threshold.

The proposed amendments remove that asymmetry. Once in force, counterparties below the €8 billion threshold would no longer be required to exchange initial margin on either new or existing contracts.

Why the change

The ESAs give two stated rationales. First, the amendments are intended to facilitate the phase-out of initial margin requirements for in-scope counterparties — that is, entities formally subject to the IM regime but operating under the threshold. Second, the authorities say the changes support greater consistency with the treatment applied in other jurisdictions.

The proposals also respond to requests from market participants and align with the ESAs' broader objectives of simplification and burden reduction.

Desk implications

For derivatives operations teams, the change matters most in collateral workflow. Firms that dropped below the €8 billion threshold — whether through portfolio compression, business change or declining exposure — currently carry dual processes: margin-free new trades alongside IM-calculation, dispute-management and custody arrangements for legacy positions. The amendments, if endorsed as drafted, would allow those legacy IM cycles to be wound down.

That affects operational cost, collateral liquidity and counterparty documentation. ISDA margin agreements, threshold monitoring and custody tri-party arrangements for in-scope legacy portfolios all become candidates for decommissioning once the RTS takes effect. Firms should note what is mandated versus what remains proposed: today, only the current framework binds. Nothing in the 3 August report changes obligations by itself.

Timeline

The final report has been submitted to the European Commission for endorsement. The draft RTS must then pass through the Commission's review and adoption process, followed by scrutiny by the European Parliament and the Council of the EU, before publication in the Official Journal of the European Union. Only at that point do the amended standards take effect, on the date the OJ publication specifies.

No compliance deadline appears in the ESAs' announcement. The legislative passage through Commission, Parliament and Council typically runs to months rather than weeks, and desks tracking the change should monitor the OJ publication for the binding dates.

The ESAs' contact for the file is Tayfun Yilmaz, communications officer, [email protected].

Assuming the Commission endorses the draft RTS without material amendment, the next concrete marker for market participants will be its appearance in the Official Journal, which will fix the date from which legacy initial margin obligations lapse for sub-threshold counterparties.