The Commodity Futures Trading Commission proposed new limits on Friday on the control banks and other large firms can exert over venues where over-the-counter swaps will soon have to trade and clear.

The futures regulator, rolling out some of the sweeping Wall Street reforms authorized by Congress, is trying to strike a tricky balance between opening up the opaque $615 trillion OTC swaps market without exposing clearinghouses, exchanges and swap execution facilities to undue risk.

The ownership and governance rule for the market was one of three the agency unveiled on Friday — the first wave of dozens of regulations it will write during the next year to try to remove risk that OTC derivatives pose to the financial system.

“This is definitely a slippery slope when it comes to ownership numbers and caps,” said Paul Zubulake, senior analyst at Aite Group, a research and consultancy firm.

“This could just create mass confusion, being told how your company is being structured,” he said. “We’re going from one extreme to the other.”

Swaps are bilateral bets on the direction of interest rates, currencies, company debt or commodity prices that companies use to hedge their risk.

Credit default swaps were blamed for accelerating the recent financial crisis when dealers like AIG found themselves on the wrong side of contracts during the slide.

CAPS ON OWNERSHIP

The CFTC proposed a 20 percent cap for voting stakes for members of clearinghouses, exchanges and swap execution facilities.

Banks, non-bank financial firms, swap dealers and major swap participants would not be allowed to collectively own more than 40 percent of a clearinghouse, the CFTC said in its plan.

But the agency did not limit ownership of non-voting shares of swaps trading and clearing venues by banks, which currently dominate trade.

The agency will accept public comments for at least 30 days before finalizing the rules by January and said it would give existing companies two years to comply.

While proponents of limits say they prevent large players from exercising too much power over the mechanics of the market, major players say tough restrictions could backfire, leaving institutions with inadequate capital.

Scott O’Malia, one of five CFTC commissioners, said he was concerned about the proposed rule limiting ownership.

“I believe we have other remedies within Dodd-Frank (the reform law) that can be more effective in achieving the goal of expanding access to clearing,” said O’Malia, a Republican.

“Market participants should have no illusion that the cost of clearing will increase.”

CUSHION AGAINST DEFAULT

The commissioners at the CFTC, including its chairman Gary Gensler, were expected to vote to advance the proposal for public comment at a hearing on Friday after presentations of the details by CFTC staff.

“I intend to be liberal in letting proposed regulations be published. This includes proposals I may not entirely agree with,” said Commissioner Michael Dunn.

Under the new Wall Street reform law, most swaps will have to be cleared through clearinghouses — requiring banks and other major players to post margin — and also will need to trade on exchanges or new swap execution facilities (SEFs).

CME Group Inc. runs the largest U.S. futures clearinghouse. Other clearinghouse operators that may be affected by the rules include IntercontinentalExchange Inc and Options Clearing Corp.

In addition, NYSE Euronext and the Depository Trust Clearing Corp are in the process of applying to open a new clearinghouse called New York Portfolio Clearing.

The CFTC also proposed clearinghouses have a financial cushion in case of a major default by a clearing member. Most would be compelled to have enough reserves to meet obligations if their largest clearing member defaulted.

Those clearinghouses deemed to be “systemically important” must be able to handle the default of its two largest clearing members, as well as meet other financial requirements, the CFTC said.

The Securities and Exchange Commission will propose similar companion rules this month for venues handling securities-based swaps, Gensler told lawmakers on the Senate Banking Committee on Thursday.