ESMA today launched a public consultation of the risk management techniques to be applied to non cleared OTC derivatives under EMIR. The focus is on the mandatory use of initial margin in bilateral margining as well as rules about the calculation of variation margin.

The overall method is guided by the IOSCO/BIS framework, which can be found here. 

While it is intended that in the first instance the rules will only apply to larger counterparties and “NFC+s”, the rules are likely to drag many others either into clearing, or to drag them into using initial margin for bilateral margin, if not at first then when the rules fully kick in.

We will be publishing our own comments in due course.