Wall Street firms have pressed Mr. Frank, chairman of the House Financial Services Committee, to tone down the Obama administration's plan to have all "standard" derivative products trade on regulated exchanges or electronic platforms. The firms say that would hurt companies by making it harder to manage risk with tailored financial products such as contracts tied to the future price of energy or crops.

Nodding to the concerns, Mr. Frank's draft legislation eliminates mandates for trading on exchanges or equivalents. It also narrows the kinds of trades that would have to pass through a central clearinghouse.

Gary Gensler, chairman of the Commodity Futures Trading Commission, told a meeting of the committee that Mr. Frank has made the bill too lax on financial firms. He cited a provision allowing major companies that trade swaps to escape new regulations if they are making the trades to manage business risk.

Any exception "should be very narrowly defined," Mr. Gensler said in prepared remarks. Henry Hu, director of a new risk-management division at the Securities and Exchange Commission, added: "This wording could cause a large number of important entities to fall outside this needed new regulation."

Among the key entities that could escape regulation, Mr. Gensler later added, are government-sponsored enterprises such as housing-finance companies Fannie Mae and Freddie Mac, which were at the center of the financial crisis.