The chairman of the U.S. House Financial Services Committee is seeking changes to draft legislation for the $450 trillion privately-traded derivatives markets, with the intent of making it harder for banks to avoid trading the contracts on exchanges.

Barney Frank said in a letter released on Wednesday that he plans to introduce amendments that would give regulators the Commodity Futures Trading Commission and the Securities and Exchange Commission the decision over what contracts are eligible for central clearing, and thus required to be traded on exchanges.

He is also seeking to tighten language over what companies may be exempt from centrally clearing their contracts, to prevent speculators from masquerading as end-users.

So-called end-users, which include companies that use derivatives to hedge against currency, commodity or other risks, have been exempt from the rules because of the additional cost central clearing could add to their businesses.

Regulators want the majority of derivatives to be cleared through central counterparties in order to reduce the systemic risks posed by the interconnectiveness of the contracts between large financial institutions.

Some regulators and observers, however, have expressed concerns that the legislation leaves gaps that could allow banks to limit the amount of contracts that are centrally cleared.

Critics say that banks want to protect the large margins they earn from trading derivatives, which benefit from opacity in the markets.

The letter was sent to the heads of the CFTC and the SEC and asks for their help in crafting the amendments.

(Reporting by Karen Brettell and Karey Wutkowski)