Banks and asset managers have pushed for more than a year to have many of their derivatives exempted from new European Union trading rules the industry says would send costs spiraling. Now they're on the verge of success.

The European Securities and Markets Authority has relaxed its proposal for determining when many common types of transactions must occur on trading platforms under new pre-trade transparency requirements that are expected to increase competition among dealers. ESMA, the EU's chief markets regulator, adopted a "more cautious approach" after industry groups said an earlier proposal was too far-reaching.

In draft rules published on Feb. 28, ESMA narrowed the criteria for when so-called package transactions, which could account for more than half of the market in interest-rate swaps and other types of derivatives, are considered liquid enough that they must meet the MiFID II rules that take effect on Jan. 3.