The government's plan to drive derivatives through transparent trading venues could sap investor confidence and hurt liquidity, some of the world's biggest swaps market participants said on Tuesday.

Executives from Blackrock Inc , Goldman Sachs Group Inc and Tradeweb zeroed in on the so-called swap execution facilities (SEFs), new entities that are yet to be fully defined, as one of the most worrisome parts of a sweeping overhaul of the $600-trillion global derivatives market.

When I think about what can change this deep and liquid market and what could impair this market structure, I get more concerned about the SEF and the SEF rules, because that's new and that's where we don't have confidence yet, said Richie Prager, head of trading and business management for Blackrock Fixed Income, at the asset manager.

That to me in some ways is the brave new world, Prager said at a conference hosted by TabbFORUM. Rules around block trades and reporting times -- long-held industry concerns -- could disrupt swaps market liquidity, he added.

The private swaps market has been blamed for exacerbating the 2007-2009 financial crisis. In response, lawmakers and regulators globally want as many of the over-the-counter securities as possible handled by transparent venues and clearinghouses, to avoid another crisis.

As part of last year's U.S. Dodd-Frank Wall Street reform bill, the Commodity Futures Trading Commission voted last month to issue a proposal to allow SEFs to conduct electronic trading similarly to transparent stock exchanges.

What came out was a more flexible approach ... but even that is not crystal clear. We have a number of questions around SEFs, said Lee Olesky, chief executive of electronic trading platform Tradeweb.

The place where there is a sequencing of the newest piece of the puzzle, it's the heart of the matching, which is SEF, he told the conference.

Tradeweb is majority-owned by Thomson Reuters.

Brad Levy, managing director in Goldman Sachs' Principal Strategic Investments Group, said that the clearing of swaps should likely be the focus as the market sequences into a new landscape, since it was core to the Dodd-Frank legislation.

Things like transparency ... as well as trading on SEFs, while important, serves potentially a different purpose, Levy said. It seems to be that the core goal is to clear more.

Levy said that in general, there is still much to be done to ensure investors are confident trading and clearing swaps in years to come.

If there is a lack of certainty for a while, and therefore a lack of confidence, then you get back in the lack of liquidity potentially, he said.

You can lose confidence, for real, in a day, Levy added. It takes a long time to get that confidence back.

Public comments on the CFTC's SEF proposal are due March 8.

(Reporting by Jonathan Spicer, editing by Matthew Lewis)