Legislation that would require swaps and other over-the-counter derivatives to be traded on an exchange is overreaching and would thwart the use of the products to hedge risk, officials from two industry groups said Friday.

Representatives of the International Swaps and Derivatives Association Inc., the largest trade group for the privately negotiated derivatives industry, and the Securities Industry and Financial Markets Association were reacting to the Derivatives Trading Integrity Act, introduced Thursday by Sen. Tom Harkin, D-Iowa, to bring the massive over-the-counter, or OTC, derivatives market under federal regulation.

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