Airlines, energy producers and other nonfinancial firms have won broad regulatory exemption from legislation that the European Commission is to propose this week to reduce risks in the multitrillion-dollar derivatives market, according to draft legislation reviewed by Dow Jones Newswires.

The final version, to be published Wednesday, would require financial institutions to route most of their trades through clearing houses, which are entities that stand between buyers and sellers and absorb losses if either side defaults.

The legislation exempts nonfinancial firms from the requirement to clear their trades if their activities do not pose "systemic" risk, according to the draft. The commission and a new regulatory body, the European Securities and Markets Authority, are to set the exemption's threshold. Derivative contracts that are used solely to hedge commercial risks and not for speculation should not be included in the calculation to determine whether a nonfinancial company has exceeded the threshold, the draft states.

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