Operational issues, such as developing and testing the relevant software – both for the CCP and its participants – and its interaction with existing systems, also take time to resolve. The challenges of establishing a CCP for repos are considerable. But at least the overall parameters are clear.
Fulfilling the G-20 commitments on OTC derivatives is a more complex task, requiring coordination among many stakeholders, with a wide range of possible outcomes. The complexity of clearing OTC derivatives Central clearing of OTC derivatives transactions will reduce systemic risk by decreasing the likelihood that one failing institution will bring down others.