Clearinghouses used for derivatives trades can be vulnerable andpotentially spread risks through the financial system, according toa U.S. Treasury report.

The Treasury's Office of Financial Research (OFR) said Wednesdaythat threats to stability have increased slightly in the past year.Its assessment of risks in the financial system, however, hasn'tbeen affected by the FederalReserve's decision to raise interest rates in December. TheFed's monetary policy makers decided Wednesday to leave ratesunchanged following a two-day meeting in Washington.

Clearing trades at a central location, rather than betweendealers or between dealers and clients, helps reduce the likelihoodof counterparties defaulting, but clearinghouses can lead tosystemic risks if they don't have sufficient resources tocover payments, or margin, according to the research office'sfourth annual report.