EU Regulators Propose Margin Relief for Firms Falling Below the €8 Billion OTC Derivatives Threshold

What's changing, why it matters, and what CIFs, PIs and insurers active in uncleared OTC derivatives should do now

On 31 July 2026, the European Supervisory Authorities (EBA, EIOPA and ESMA) published their Final Report (ESA 2026 07) proposing amendments to the RTS on risk-mitigation techniques for uncleared OTC derivatives under Commission Delegated Regulation (EU) 2016/2251. The changes are limited in scope but operationally significant for any counterparty whose derivatives activity sits near the EUR 8 billion AANA threshold.

The problem the ESAs are fixing

Under the current rules, a counterparty whose aggregate month-end average notional amount (AANA) of non-centrally cleared OTC derivatives, measured over March, April and May of the preceding year, falls below EUR 8 billion is exempt from posting initial margin, but only on new trades.

Existing contracts remain subject to initial margin obligations for as long as they run. That means firms still have to maintain margin calculation processes, exchange collateral, and keep custodial and segregation arrangements in place for legacy trades, even after they've genuinely dropped below the threshold. It also puts EU counterparties at a disadvantage relative to other jurisdictions, which already exempt existing contracts once a firm falls below the equivalent threshold, creating an incentive to trade with non-EU counterparties instead.

What the draft RTS actually change

1. Existing contracts get relief too, across the whole bilateral portfolio. Where the March to May AANA of either counterparty falls below EUR 8 billion, no initial margin needs to be collected on new or existing uncleared OTC derivative contracts between them, not just new trades as today.

2. Already-posted margin may be released. Where the exemption applies, initial margin already collected on outstanding contracts can be released, freeing up liquidity previously locked up in legacy trades. Importantly, this is elective, not automatic: counterparties don't have to release collateral precisely on the trigger date. They can time the release to suit their operational readiness, agree the release process between themselves, or simply choose to keep collecting margin voluntarily if that's more convenient.

3. Faster exit, slower entry, an intentional asymmetry.

• Falling below the threshold: firms may implement the exemption as early as 1 June of the relevant year (rather than waiting until year-end), based on the March to May AANA calculation.

• Rising above the threshold: firms only become subject to margin requirements on new trades from 1 January of the following year, preserving the existing preparation runway for firms moving into scope. Existing contracts aren't retrospectively pulled back into scope just because the threshold is exceeded again.

4. AANA calculation methodology is unchanged. The threshold test still runs off the March, April and May month-end average notional amount, and is still calculated at counterparty level, or at group level where the counterparty belongs to a group. This EUR 8 billion test is separate from the EMIR clearing thresholds, which are set by asset class, and the two shouldn't be confused.

5. A related tidy-up for equity options. Following EMIR 3 (Regulation (EU) 2024/2987), which already exempts single stock options and equity index options from collateral-exchange requirements, Article 38(1) of the RTS, which contained now-obsolete transitional wording for these instruments, is deleted. The underlying exemption for these instruments is unaffected; this is purely a technical clean-up.

What this doesn't change

It's worth being precise here: the amendment is about initial margin specifically. It doesn't touch the other EMIR risk-mitigation obligations that continue to apply regardless of where a counterparty sits against the AANA threshold, including variation margin, timely confirmation, portfolio reconciliation, dispute resolution, and portfolio compression requirements.

Why it matters in practice

For treasury and collateral management functions, this removes a real operational drag: no more running parallel margin, custody and reconciliation processes for counterparty relationships that have genuinely fallen below the relevant activity threshold. For insurers in particular, who per feedback from EIOPA's Stakeholder Groups tend to sit closer to this threshold than banks given the more targeted, hedging-driven use of derivatives, the relief may be proportionally more relevant than for larger banking counterparties with consistently high derivatives volumes.

The ESAs opted for a light-touch consultation (Stakeholder Groups only, no open public consultation or impact assessment) given the narrow scope of the amendment, a route several stakeholders accepted as appropriate here, while flagging it shouldn't become the default approach for future RTS changes.

What's next

The Final Report has been submitted to the European Commission for endorsement as a Commission Delegated Regulation. It will then go through non-objection by the European Parliament and Council before publication in the Official Journal, entering into force 20 days after publication. No firm date has been set yet, so this is one to watch rather than act on immediately, but firms with derivatives activity near the threshold should start reviewing their margining, custodial and collateral-release processes now so they're ready to apply the exemption as soon as it takes effect.