Reforms to enhance the safety of over-the-counter (OTC) derivatives markets in the wake of the global financial crisis are driving a shift to central clearing, a new report finds.

G20 policymakers sought to encourage central clearing to address the large and opaque interconnections between firms that were revealed by the crisis, highlighting a systemic vulnerability. A new report from the Global Association of Central Counterparties (CCP12) says these efforts are bearing fruit, with central clearing increasing steadily for most derivatives categories since G20 reforms were adopted.

The increase suggests that “clearing is now the default choice for many standardized products,” the report says. “Not only are clearing mandates effective, but the data show that markets are choosing to voluntarily clear non-mandated currencies, non-mandated indices and non-mandated products.”

In particular, the report finds that central clearing has increased among OTC interest rate derivatives and credit asset classes. In contrast, foreign exchange markets are lagging behind, so further incentives to clear may be necessary for those markets, the report says.

It also notes that post-trade transparency is still lacking in much of the world, most notably Europe, given the size of its derivatives markets.

Xu Zhen, chairman of CCP12, said the report “emphasizes the importance and advantages of central clearing and points out that there is room for more of the markets to move to clearing.”