Europe's biggest banks will need billions of dollars to meet collateral requirements for derivatives, starting this year, under the latest version of a key rule that seeks to reduce risk.

The standards, which will be phased in from September this year, may require EU buyers and sellers of swaps to set aside between 200 billion euros (US$220.5 billion) and 420 billion euros in total once they are fully effective in 2020, three European regulators said on Tuesday in final draft standards. The requirement aims to stiffen standards for swaps contracted directly between traders rather than being settled at clearinghouses.

"The overall reduction of systemic risk and the promotion of central clearing are identified as the main benefits of this framework," the European Banking Authority, European Securities and Markets Authority, and European Insurance and Occupational Pensions Authority said in the document.