WASHINGTON - Broker-dealer counterparties of municipal interest rate swaps and other customized over-the-counter derivative contracts would have to meet much higher capital and margin requirements than for standardized derivatives contracts under the Obama administration's regulatory reform proposals, Treasury Secretary Timothy Geithner told lawmakers Friday.

At a joint hearing of the House Agriculture and Financial Services committees that demonstrated their efforts to share jurisdiction over derivatives, Geithner said the higher capital and margin requirements would be designed to both cover the increased risks that customized products pose and to deter dealers from customization to avoid central clearing and exchanges. Standardized OTC derivatives would have to be centrally cleared or exchange-traded under the administration's plan.

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