House Financial Services Committee Chairman Barney Frank, D-Mass., has vowed in a letter to regulators to try to strengthen proposed rules on derivatives.

Frank wrote Tuesday to the heads of the two agencies that would probably be responsible for overseeing derivatives markets to reassure them that he would try to close some loopholes that they, along with other observers, identified in his derivatives legislation.

Frank told Commodity Futures Trading Commission Chairman Gary Gensler and Securities and Exchange Commission Chairman Mary Schapiro that he would design amendments to the derivatives bill the committee approved in mid-October and present them during the House's debate on the bill.

The amendments would address two areas identified as problem zones: the question of who has the authority to decree that a derivatives contract should be cleared and exchange-traded and the issue of which derivatives users may legitimately claim exemption from clearing and exchange-trading requirements.

"We will clarify exactly who can claim exemption," Frank wrote. On determining which contracts should be cleared, he said, "we will place responsibility of deciding what swaps must be cleared solely with the regulators."

Frank's legislation originally gave for-profit clearing platforms the power to decide which derivatives contracts should be cleared. But observers said the clearing houses would be inclined to base their decisions on their own interest, not that of the wider market.

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