The European Banking Authority (EBA) today published its response to the European Commission’s Call for Advice on fees to validate pro forma models under the European Market Infrastructure Regulation (EMIR).

The Technical Advice makes a series of recommendations to the Commission in view of its Delegated Acton fees to be charged by the EBA for the performance of its new role as central validator of pro forma models, such as ISDA SIMM, under EMIR.

First, the EBA proposes that the Delegated Act allows for all costs – whether direct or indirect - relating to the activities linked to the central validation function of pro forma models to be covered.

Second, to address the feedback received on the difficulties in calculating the 12-month average notional amount of non-centrally cleared OTC derivatives, the EBA proposes to rely on simpler approaches than the ones consulted upon. To this end, the EBA makes proposals on the practical details of the calculation methodology that would ensure proportionality amongst all counterparties in the determination of the annual fee.

Finally, the EBA makes recommendations on the payment modalities and the information to be communicated to EBA for the determination of the individual fees and the invoicing process.

Legal basis

Article 11(12a) of EMIR mandates the EBA to set up a central validation function for the elements and general aspects of pro forma models, and changes thereto, used or to be used by financial and non-financial counterparties. The EBA shall charge an annual fee, per pro forma model, to financial and non-financial counterparties using the pro forma models validated by the EBA. The fees are expected to cover the costs incurred by the EBA in performing this role as central validator.

Pro forma models, such as ISDA SIMM, are used by the industry to calculate initial margin.

On 31 July 2024, the EBA received a Call for advice on a possible Delegated Act on fees with the request to submit its response by Q2 2025.

In March 2025, the EBA consulted market participants as part of its response. The feedback received to this Discussion Paper helped the EBA finalise its response to the European Commission.