EU: EBA Launches Consultation on Fees for Pro Forma Model Validation Under EMIR

 

The European Banking Authority (EBA) has opened a public consultation on the fees that financial and non-financial counterparties must pay for the validation of pro forma models under the European Market Infrastructure Regulation (EMIR). The consultation is open until 7 April 2025.

As part of its newly assigned role under EMIR, the EBA will act as the central validator of pro forma models across the EU. These models, including the ISDA SIMM, are widely used by the industry to calculate initial margin. To fulfill this role, the EBA will charge counterparties an annual fee per validated pro forma model, covering the costs incurred in performing its validation duties.

The discussion paper presents the EBA’s budgeting approach, estimates the main costs associated with this function, and outlines the proposed fee calculation methods. It also details the payment modalities for counterparties subject to these fees.

Legal Basis, Background, and Next Steps

Under Article 11(12a) of EMIR, the EBA is responsible for establishing a central validation function for pro forma models and any modifications to them. The regulation requires the EBA to charge an annual fee per model used by financial and non-financial counterparties.

On 31 July 2024, the European Commission issued a Call for Advice regarding a potential Delegated Act on fees, requesting the EBA’s response by Q2 2025. The EBA has been instructed to conduct a broad consultation with market participants as part of this process.

The feedback collected from this consultation will inform the final EBA response to the Commission’s request, shaping the future framework for pro forma model validation fees.