Regulators need to finish writing the rules on how to unwind a swaps clearinghouse if it fails, derivatives industry users and observers said at a conference today.

"It's very important that sooner rather than later regulators make sure we get these things written down so they're respected," John Williams, a partner in the derivatives and structured products finance group at law firm Allen & Overy LLP, said today at an over-the-counter derivatives symposium at the Federal Reserve Bank of Chicago. He called a default by a clearinghouse "the worst worst scenario," and said more research on how to handle such an event is needed.

Clearinghouses are required to process most swaps in the $708 trillion OTC derivatives market under both U.S. and European regulations. The Financial Stability Oversight Council, led by U.S. Treasury Secretary Timothy F. Geithner, is determining which clearinghouses should face heightened supervision, examination and reporting requirements, and it hasn't yet announced its designees. The body also includes Federal Reserve Chairman Ben S. Bernanke.