The correct answer is D.

The statement that the product needs to be passively traded is incorrect. For a CCP to clear a product, it must be actively traded. The reason for this is twofold. Firstly, if a product is not actively traded, it may be challenging for the CCP to unwind a member's position if the member fails to produce margin when required. This is because the lack of active trading can make it difficult to find a buyer or seller for the product at a fair price. Secondly, it may also be difficult to obtain up-to-date valuations for non-actively traded products. This is because the price of a product is determined by the market, and if there is little trading activity, the market price may not accurately reflect the true value of the product. Furthermore, CCPs will not consider it worthwhile to develop the systems to support the clearing of a product if their members do not trade it frequently. Therefore, the condition that a product needs to be passively traded is not a requirement for a CCP to clear a product.

• Choice A is incorrect. The legal and economic terms of the product must indeed be standard within the market. This ensures that all parties involved in a transaction have a clear understanding of the product's characteristics and risks, which is crucial for maintaining market integrity.
• Choice B is incorrect. Extensive historical data on the product price should be available. This data allows CCPs to assess potential risks associated with clearing a particular product, including its volatility and liquidity risk.
• Choice C is incorrect. There needs to be generally accepted models for valuing products. These models help in determining the fair value of a financial instrument, which is essential for risk management purposes.