The EBA calls on counterparties to seek authorisation for initial margin model based on ISDA SIMM

The European Banking Authority (EBA) launched a data collection, through the competent authorities, to obtain the list of EU counterparties that will be required to apply to the EBA for validation of ISDA SIMM, as well as their contact persons. The EBA underscores the counterparties' obligation to apply for the authorisation of the use of initial margin models and warns of the legal consequences in case of non-authorised use under the European Market Infrastructure Regulation (EMIR).

All financial and non-financial counterparties subject to the requirement to exchange initial margin (IM) in accordance with EMIR and Article 36 of the joint ESAs RTS on uncleared OTC derivatives calculated - directly or indirectly - using IM models based on ISDA SIMM  should apply to their competent authorities for the authorisation of such models as per EMIR and the EBA’s no-action letter published on 17 December 2024.

Counterparties must provide their competent authorities with the information requested. This information will be used to onboard counterparties onto the EBA’s validation system during the first semester of 2026, ahead of counterparties’ applications to the EBA for validation of ISDA SIMM expected in the second semester of 2026. 

Counterparties failing to apply for the EBA’s validation will no longer be permitted to use ISDA SIMM under EMIR until they rectify their status with the EBA.

The EBA’s no-action letter remains in force.