What Is the Primary Advantage of a Centrally Cleared DVP over a Bilateral OTC DVP?

The primary advantage is the massive reduction in counterparty credit risk. A centrally cleared DVP benefits from the CCP's guarantee (novation), standardized margining, and a large default fund.

A bilateral OTC DVP relies solely on the creditworthiness of the two counterparties and the terms of their collateral agreement, which is less robust and more operationally complex.