What is the Central Counterparty Clearing Mechanism in Derivative Securities?

Could the admin please assist in explaining what the central counterparty clearing mechanism in derivatives securities is?

According to Clause 19, Article 3 of Decree 158/2020/ND-CP, the regulation is as follows:

The central counterparty mechanism is the clearing and settlement of derivative securities transactions conducted by the Vietnam Securities Depository and Clearing Corporation, wherein the Vietnam Securities Depository and Clearing Corporation, through the process of novating, becomes one counterparty of the derivative securities transaction, and the clearing member is the remaining counterparty of the transaction.

Sincerely!

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