A U.S. plan to extend the reach of its derivatives rules across international borders "won't work" without alteration, a top European regulator said in Washington today.

U.S., Asian and European regulators are gathered in an effort to resolve differences over the international reach of the U.S. swaps rules drafted by the Commodity Futures Trading Commission for Goldman Sachs Group Inc., Deutsche Bank AG and other trading firms. Absent agreement, they risk undermining international efforts to reduce risks in the $648 trillion global swaps market, the overseas regulators told the CFTC.

Patrick Pearson, head of the financial market infrastructure unit at the European Commission, at the meeting warned of risks in the CFTC's guidance for complying with its rules. "The proposed approaches across the globe simply won't work. They won't mesh. They won't interact. They will cause conflicts," Pearson said at the meeting. "Washington, we have a problem," he said.