Do OTC Derivatives Ever Use a Central Clearing Mechanism? ▴ Learn

Do OTC Derivatives Ever Use a Central Clearing Mechanism?

Yes, following regulatory reforms like the Dodd-Frank Act, a significant portion of standardized OTC derivatives, particularly interest rate swaps and credit default swaps, are now mandated to be centrally cleared. This effort aims to reduce systemic risk in the financial system by bringing more transparency and risk management to the OTC market.

Non-standardized contracts generally remain uncleared.

How Do Regulatory Frameworks like Dodd-Frank or MiFID II Impact the Mandatory Clearing of OTC Derivatives?

Does MTM Apply to Over-the-Counter (OTC) Derivatives?

Do Over-the-Counter (OTC) Derivatives Typically Use a Central Clearing House?

What Types of Derivatives Are Mandated to Be Centrally Cleared in Major Jurisdictions?