EBA consults on draft guidelines and RTS on initial margin model authorisation

The European Banking Authority (EBA) has launched two consultations on draft guidelines and regulatory technical standards (RTS) on the authorisation of initial margin models under the revised European Market Infrastructure Regulation (EMIR 3). Under EMIR 3, counterparties must obtain prior approval from their competent authority to use internal models used to calculate initial margin for non centrally cleared derivatives. The proposals aim to create an efficient and harmonised authorisation process across the EU for assessing these models.

The draft guidelines set out the minimum information and documentation required for a complete authorisation application, building on the Annex to the EBA’s December 2024 No Action Letter, which will cease to apply once the guidelines enter into force. The EBA expects to gradually roll out the application of the guidelines over a period of 18 months, staggering the application for different groups of counterparties based on the significance of their over-the-counter (OTC) trading activities.

The draft RTS specify the supervisory assessment techniques to be applied by competent authorities when authorising initial margin models. These will apply only to counterparties within groups whose aggregate monthly average notional amount of non-centrally cleared OTC derivatives exceeds EUR750 billion. Where an internal model relies on a pro‑forma model, prior validation by the EBA is required before authorisation by the competent authority. The deadline for comments on the consultations is 17 June, with a public hearing scheduled for 4 May.

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