Warner suggests derivatives "trip wires"

Sen. Mark Warner (D-Va.) said Thursday lawmakers should include "trip wires" that could lead to tougher regulations on derivatives.

On the Senate floor, Warner suggested triggers could be written into the law to impose more stringent regulations on firms that try to evade the new rules. Warner said the triggers could also be a way to stiffen up regulations without forcing the market overseas.

"As we try to put in place new rules around derivatives, we don't want want to push the whole derivatives market offshore," Warner said.

Legislation pending in the Senate would require banks to spin off their derivatives desks, which analysts say would force banks to raise tens of billions of dollars to capitalize their new standalone operations. Warner has expressed concern about the provision.

Warner suggested putting some penalties and "trip wires" in place, so that regulations could get tougher if banks do not carry through on their obligations.

"Putting in place trip wires that might then cause a Draconian response would help self-police the industry," Warner said.

Sen. Kirsten Gillibrand (D-N.Y.) has also raised concern about the spin-off provision, which would have its biggest impact on New York banks.