Responding to warnings from U.S. regulators that banks are finding ways around new curbs on financial risks, Wall Street is mobilizing to defend its latest tactic to keep overseas derivatives beyond the reach of U.S. rules.

The industry's main lobbying group is prepping a strategy to explain why the new practice—removing guarantees from U.S. banks' overseas trading—is a lawful response to the 2010 Dodd-Frank Act and not an effort to take advantage of a loophole, according to a two-page memo obtained by Bloomberg News.

The move "allows non-U.S. affiliates to compete on a level playing field with their foreign counterparts," the Securities Industry and Financial Markets Association (Sifma) said in the unsigned memo. The association—which represents JPMorgan Chase & Co., Morgan Stanley, and other large U.S. swap-dealers—said the change is similar to "other steps that banks regularly take" in response to new regulations.