Central clearing a tricky fix for over-the-counter derivatives

Within the overall review of the causes of the global financial turmoil, the failures of AIG and Lehman Brothers cast over-the-counter (OTC) derivatives, incorrectly, as Public Enemy No. 2 (after securitised US subprime debt) for their perceived lack of transparency and lack of prudential regulation. As a result, the G-20 has stipulated that all standardised OTC derivatives should be cleared through central clearing counterparties (CCPs) by the end of 2012.

The US is in the final stages of