PS23/25 – Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251
Executive Summary
PS23/25 from the PRA and FCA finalizes amendments to Binding Technical Standards (BTS) 2016/2251 under UK EMIR, introducing an indefinite exemption for single-stock equity options and index options from bilateral margin requirements, removing IM obligations on legacy contracts for firms falling below thresholds, and allowing alignment with third-country jurisdictions' timelines for IM assessments. These changes reduce operational burdens and enhance competitiveness for UK firms trading non-centrally cleared derivatives, following feedback from CP5/25, while maintaining prudential standards. #
What Changed
- Indefinite exemption for equity options: Single-stock equity options and index options are permanently exempted from UK bilateral initial margin (IM) and variation margin (VM) requirements, replacing a temporary exemption ending 4 January 2026. This balances safety with international competitiveness, as capital can substitute for margin. - Legacy contracts relief: Firms falling below the Average Aggregate Notional Amount (AANA) threshold no longer need to exchange IM on outstanding legacy non-centrally cleared derivatives contracts. - Third-country alignment: UK firms can adopt another jurisdiction’s threshold calculation periods and entry-into-scope dates for IM requirements when trading with counterparties subject to that jurisdiction’s margin rules (applies only to UK firms vs. third-
What You Need To Do
- Assess cross-border transactions
- Conduct gap analysis on margin calculations, collateral management, and reporting; train front-to-back office teams on changes
- Retain records of AANA calculations and threshold monitoring to justify exemptions or relief
- For firms with collected IM on now-exempt legacy positions, evaluate release options per updated FCA instrument language
Key Dates
Compliance Impact
Urgency: High – Effective immediately since 27 November 2025 (over a month ago as of current date), firms risk non-compliance if systems still enforce outdated IM/VM for exemptions; operational fixes are needed urgently to avoid breaches, fines, or disputes, especially with phase-out of temporary equity options relief approaching 4 January 2026. Impacts cost savings but requires swift policy recal
Who is Affected
Summary
Policy statement 23/25