In focusing on that today, I want to look at three questions:   why is there a general case for promoting central clearing?   what are the complexities involved? ; and    where does the process stand in Australia? First, why central clearing?
The general case for promoting central clearing in derivatives markets is based on the aim of reducing systemic risk by managing interconnectedness. In markets without central clearing, counterparty exposures build up bilaterally and, in certain kinds of products, they can accumulate to very large notional amounts over time.