UK EMIR Newsflash: Amendments to UK EMIR Bilateral Margin Requirements

Background

On 27 November 2025, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) published Joint Policy Statement PS23/25 - Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251 (BTS).  This follows on from the regulators' joint consultation in March 2025 and provides a summary of feedback, along with confirmation of the final rule changes.  Read on for a summary of what is changing.

1) Indefinite exemption for single-stock equity options and index options

The regulators are amending Article 38 of the BTS to remove the expiry date from the exemption for single-stock equity options and index options from the UK EMIR bilateral margining requirements. This temporary exemption was most recently extended in December 2023 and had been set to expire on 4 January 2026.

An indefinite exemption provides market participants with greater certainty and is generally regarded as a welcome amendment to the UK EMIR regime. (For those following EU EMIR developments, note that the equivalent exemption was made more permanent by EMIR 3.) 

2) Amendments for legacy contracts for counterparties below the IM AANA threshold

The regulators are adding a new Article 28(1A) to the BTS, removing the requirement to exchange IM for legacy contracts once a counterparty subsequently falls out of scope of the IM requirement based on its annual IM AANA calculation:

"By way of derogation from Article 2(2), counterparties may provide in their risk management procedures that initial margins already collected are released and no further initial margins are collected for all outstanding OTC derivative contracts between two counterparties from the start of a calendar year where one of the two counterparties has an aggregate month-end average notional amount of non-centrally cleared OTC derivatives for the months March, April and May of the preceding year of below EUR 8 billion."

This change more closely aligns the position for legacy contracts with that in a number of other jurisdictions (including the US), and could be particularly helpful for buy-side counterparties.

3) Amendments to allow firms to align dates with other jurisdictions

The regulators are adding new provisions to Article 28 of the BTS to permit, in certain cases, counterparties subject to UK EMIR, when transacting with a counterparty subject to the margin requirements in another jurisdiction, to use that jurisdiction's IM AANA calculation periods and dates of entry into scope of IM requirements to determine whether those derivatives are subject to IM requirements. This is in recognition of the practical issues raised by the industry in relation to cross-border issues where calculation and implementation dates do not align across jurisdictions. 

The amended BTS are attached to the joint policy statement.

Next steps

The amendments to the BTS are effective on 27 November 2025.  We suggest that counterparties subject to UK EMIR update their policies and procedures to reflect these changes, and in particular, consider whether the amendments for legacy contracts are relevant to them and their current IM arrangements. 

Feel free to contact us if you would like to discuss any aspect of this with us.