Exchange-traded derivatives are indeed transacted through a process that is verified by a central exchange. This is one of the key distinguishing features of exchange-traded derivatives. The central exchange acts as an intermediary between the buyer and the seller, ensuring the integrity of the transaction. This process involves verifying the execution of the transaction and recording the identities of the participants. The central exchange also facilitates the creation of clearing and settlement operations, which further enhances the transparency and security of the transaction. This is in contrast to OTC derivatives, which are traded directly between two parties without the involvement of an intermediary. As a result, OTC derivatives are typically associated with a higher level of counterparty risk compared to exchange-traded derivatives.

Choice A is incorrect. While it's true that exchange-traded derivatives are often traded in larger lot sizes than OTC derivatives, this is not a defining characteristic. The size of the lots can vary greatly depending on the specific derivative and market conditions.

Choice C is incorrect. It's not accurate to say that there is zero potential to earn arbitrage profits in markets where exchange-traded derivatives are traded. While these markets are typically more efficient and thus offer fewer arbitrage opportunities than less regulated OTC markets, it's still possible for savvy traders to identify and exploit pricing inefficiencies.

Choice D is incorrect. Exchange-traded derivatives are actually less flexible and customizable than OTC derivatives. This is because they're standardized contracts with fixed terms and conditions, whereas OTC derivatives can be tailored to meet the specific needs of the parties involved.