The EBA kicks off EU central validation of ISDA SIMM from 1 March 2026

The European Banking Authority (EBA) will start the central validation of the International Swaps and Derivatives Association Standard Initial Margin Model (ISDA SIMM) on 1 March 2026. The Decision on arrangements for ISDA SIMM validation, published today sets out the operational framework governing the EBA’s new validation function. This marks a key milestone in the implementation of the EBA’s new role as central validator of pro forma models, aimed at ensuring consistent, robust and transparent supervisory oversight of initial margin models across the EU.

Under the amended European Market Infrastructure Regulation (EMIR), the EBA is mandated to establish and operate an EU-level validation function for pro forma initial margin models used for non-centrally cleared over-the-counter derivatives.

With today’s announcement, the EBA confirms that  its central ISDA SIMM validation function is operational and ready to start as of 1 March 2026.

Coinciding with this announcement, the EBA publishes the Decision on arrangements for IMMV of ISDA SIMM, which will also enter into force on 1 March 2026. The Decision details the operational arrangements for the validation function, including onboarding and application procedures, governance and cooperation mechanisms with competent authorities and ISDA, and the criteria for ongoing monitoring and assessment of SIMM model changes.

Legal basis, background and next steps

In accordance with Article 11(12a) of EMIR, the EBA is required to set up a central validation function for the elements and general aspects of pro forma models used or to be used by financial counterparties and non-financial counterparties.

The ISDA SIMM qualifies as a pro forma model within the meaning of Article 11(12a), sixth subparagraph, of EMIR.

Pursuant to Article 89(13) of EMIR, the EBA shall publicly announce that it has set up its central validation function.

For the purpose of the Delegated Act mandated under Article 11(12a), seventh subparagraph, of EMIR, 1 March 2026 shall be the EBA readiness date.

The EBA has now obtained, through competent authorities, the list of financial and non-financial counterparties that exchange initial margin and use – directly or indirectly - ISDA SIMM pro forma model following the data collection launched on 7 November 2025.

In a first phase, those counterparties will be contacted directly by the EBA for onboarding onto the EBA ISDA SIMM validation system. The onboarding process will be conducted in stages.

In a second phase, onboarded counterparties will be invited to submit their applications for SIMM validation. This phase is expected to begin in August 2026.

The EBA expects to issue its first SIMM validation decision in Q4 2026, including the list of counterparties to which the validation decision applies. Pending the publication of the EBA’s validation decision, counterparties may continue to use initial margin models based on ISDA SIMM, provided that they have applied to their competent authorities for the authorisation of such models in accordance with EMIR and the EBA’s no-action letter published on 17 December 2024.