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Does Novation Apply to All Derivatives Cleared through a CCP?

Yes, novation is fundamental to central clearing; the CCP must interpose itself as the legal counterparty for the trade to be centrally cleared.
Greeks.Live23.11.25

Does Novation Apply to All Derivatives Cleared through a CCP?

Yes, novation is a fundamental characteristic of central clearing. For a derivative trade to be centrally cleared, the CCP must interpose itself as the legal counterparty to both sides.

If a derivative is not novated, it remains an over-the-counter (OTC) bilateral contract.

How Does a Central Counterparty (CCP) Mitigate Counterparty Risk?
What Is the Process of ‘Novation’ in the Context of a Clearing House?
How Is the Process of ‘Novation’ Central to the Clearing House’s Role?
Explain the Difference between Bilateral and Centrally Cleared Derivatives

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