Revenue at JPMorgan Chase & Co. could drop as much as $3 billion if the bulk of derivatives trades moves to exchanges, a Sanford C. Bernstein & Co. analyst said Wednesday.

The figure is Bernstein's "worst-case" scenario under an overhaul of derivatives trading being discussed in Washington.

Under some proposals, dealers and major investors would trade common derivatives on regulated exchanges in lieu of the less heavily regulated over-the-counter market.

A loss of $3 billion would translate into a bite of as much as 20 cents a share from JPMorgan Chase's earnings, Bernstein analyst John McDonald wrote in a note to clients.

Derivatives revenues accounted for about 8% of the company's revenue over the period 2006 to 2008, or about $6 billion a year, the analyst noted.

A spokesman for the banking company declined to comment.

Meanwhile, Treasury Secretary Tim Geithner and others urged lawmakers Wednesday to bring new regulations to the over-the-counter derivatives market.

Brooksley Born, a former chairwoman of the Commodity Futures Trading Commission, told a congressional committee that continuing to allow direct trading of over-the-counter derivatives without regulating them on an exchange poses "grave dangers to the economy."

She said after the hearing of the Congressional Joint Economic Committee that fear of cutting into corporate profits should not deter the government from passing tight regulations.

"Those profits are very small compared to what it has cost the American public," she said.

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