The House Financial Services Committee late Friday distributed a discussion draft of legislation to regulate over-the-counter derivatives that appears to be substantially similar to one floated by the Obama administration this summer. The move left unresolved technical glitches that render meaningless a provision intended to restrict small municipalities from participating in derivatives transactions, attorneys said yesterday.­

Committee chairman Barney Frank, D-Mass., who drafted the legislation, will lead a hearing on it tomorrow. The bill amends the section of the Commodity Exchange Act that defines what constitutes an “eligible contract participant” for a derivative transaction.

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