Sen. Blanche Lincoln (D-Ark.) defended her tough, new rules on derivatives markets as an effort to bring transparency to the U.S. financial system.

Lincoln said on Thursday that her planned legislation on derivatives, a form of betting on the direction of prices of commodities and other items, wouldn't stop such trading, but would add transparency to markets.

The Arkansas centrist, who's facing a liberal primary challenger, seemed to confirm reports indicating that banks would have to spin off their derivatives trading from day-to-day operations, a move that is seen as more sweeping than the Obama administration and leaders in Congress had sought.

"If they want to remain a bank, they're going to need to separate that," Lincoln said in reference to derivatives trading during an appearance on ABC's "Top Line" webcast. "There's no reason that other banks should be paying into the FDIC to pay for these risky products."

While the bulk of the financial reform legislation had been crafted in the Senate Banking Committee, Lincoln enjoys oversight of derivatives as chairwoman of the Senate Agriculture Committee.

"We're not asking them to stop, we're asking them to ensure that the light of day comes to this issue," Lincoln said. "To date we have not regulated these processes."