Global regulators proposed tougher standards for clearinghousesat the heart of the US$493 trillion derivatives market, taking someof the biggest steps yet to prevent the platforms from becoming toobig to fail.

The Financial Stability Board (FSB) and other securitiesregulators published guidelines on Tuesday for clearinghouses tobolster their assessments of risks and improve plans for how they'drecover after the default of major bank members. Therecommendations came after regulators found some clearinghousesnegligent in complying with existing standards.

The Basel-based FSB, whose members include the Bank of Englandand U.S. Federal Reserve, also began to lay out how regulatorscould resolve a clearinghouse if its own recovery plan fails.