One of the key regulatory initiatives for the OTC derivatives market is the requirement for all trades to be reported to a central trade repository. This initiative was put in place to provide regulators with comprehensive information on the risks being undertaken by participants in the OTC market. The central trade repository serves as a centralized database that collects and maintains records of all OTC derivative transactions. This allows for increased transparency and aids in the identification and mitigation of systemic risk. The central trade repository also facilitates the monitoring of market abuse and manipulation, thereby promoting market integrity. Furthermore, it enhances the efficiency of risk management practices by providing market participants with a consolidated view of their positions and exposures.

Choice A is incorrect. Not all OTC derivatives must be traded bilaterally. While bilateral trading is a common feature of OTC derivatives, it's not a regulatory requirement for all such instruments. Some OTC derivatives can also be cleared through central counterparties (CCPs).

Choice C is incorrect. It's not accurate to say that OTC derivatives can only be cleared through individual banks. In fact, the post-financial crisis regulatory reforms have encouraged the clearing of standardized OTC derivatives through CCPs to reduce counterparty risk.

Choice D is incorrect. Although the term "over-the-counter" suggests that these instruments are traded outside of formal exchanges, it doesn't mean they can only be traded over-the-counter. Some types of OTC derivatives may also be traded on organized exchanges.