EU’s IM model validation rules may put Simm in jeopardy

Draft RTS creates validation hurdles and cross-border conflicts, industry warns

Europlaza tower in Paris is home to the European Banking Authority
Europlaza tower in Paris is home to the European Banking Authority
Photo: 11h45_Paris La Defense

Stringent validation requirements proposed by the European Union could deter some firms in the region from using the industry’s standard initial margin model (Simm) for non-cleared derivatives.  

Industry sources tell Risk.net the draft regulatory technical standards (RTS) for initial margin model validation (IMMV) issued by the European Banking Authority (EBA) on November 4, set too high a bar for compliance and conflict with requirements in other jurisdictions.

The rules will require large

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