SECURITIES regulators should avoid a race to the bottom when it comes to agreeing on controls on the $600 trillion over-the-counter derivatives market, the chairman of the US Securities and Exchange Commission, Elisse Walter, said yesterday.

Addressing the forum, Ms Walter said regulators should not have an "all or nothing" approach to regulating the international OTC derivatives market. There were "real dangers" of "conflicts and costly overlaps" by different regulations in each country.

But she warned that regulators needed to be careful that players in the market did not seek to exploit "regulatory gaps" that could occur if regulators in one market decided to ignore activity taking place in another jurisdiction.

Ms Walter's comments came as securities regulators in the G20 countries have been working towards tighter regulation of the OTC market in the wake of the global financial crisis.