The paper explores how OTC derivative contracts are centrally cleared in the EU to prevent financial crises. The EU introduced mandatory central clearing after the Global financial crisis. Different models of central clearing are used for risk management in financial transactions. All OTC derivatives market participants are categorized into financial and non-financial counterparties based on their activity level. ESMA supervises central counterparties and sets requirements for them. The paper also discusses practical issues faced by major EU central counterparties.