Central counterparties for OTC derivatives The final element of the comprehensive reform plan is mitigating contagion between sectors and institutions in the financial system. The house needs firewalls. Recognizing this imperative, the G-20 Leaders mandated that all standardized OTC derivatives contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through CCPs.
In addition, all OTC derivatives trades should be reported to trade repositories. The architecture for trade repositories is converging on a global platform, although important issues of data access are still to be worked out. For CCPs, the basic architecture has yet to be resolved. There are two competing designs – global and local – and each has its costs and benefits.