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Geithner: tighten up derivatives trading...

US TREASURY Secretary Timothy Geithner said yesterday there was a good case to let some firms use derivatives with little scrutiny for business purposes, but that most trading should face stiffer rules.<br /><br />Geithner also urged lawmakers to let regulators block companies from customising derivatives contracts to avoid trading on central clearing houses as a way to evade the view of regulators.<br /><br />He told the Senate Agriculture Committee that it was &ldquo;imperative&rdquo; regulators get powers to proactively require central clearing of any derivative types whether or not they are currently accepted for clearing.<br /><br />&ldquo;We... should require that regulators carefully police any attempts by market participants to use spurious customisation to avoid central clearing,&rdquo; Geithner said.<br /><br />Subjecting derivatives to more supervision is a key element of the Obama administration&rsquo;s bid to overhaul financial regulation. But many firms are worried that reform could make it harder for them to hedge.