A derivative contract that, like an OTC derivative, is negotiated bilaterally (privately) between the two parties and is booked with a clearing house, like a listed derivative (exchange-traded derivative). Cleared derivatives are trades negotiated over-the-counter (OTC) and are limited to standardized contracts. The clearing house assumes the role of counterparty to all trades and imposes mandatory margin requirements (initial margin and variation margin). These trades are subject to daily settlement (mark to market) and margin calls.
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