Wall Street is close to cutting billions of dollars from the cost of a derivatives rule as a debate among regulators over how tough the provision should be shifts in banks' favor.

Firms such as JPMorgan Chase & Co. and Morgan Stanley wouldn't have to set aside as much money in trades between their own divisions in the final version of a rule U.S. regulators may release as soon as next month, said two people familiar with the discussions. After months of disagreement, the agencies, which include the Federal Deposit Insurance Corp. (FDIC) and Federal Reserve, decided to ease the demands of an earlier version of the proposal, according to the people.

The industry had fought the mandate that both a bank and an affiliate put up collateral, which was laid out in the version of the rule that was proposed last September and had strong support from the FDIC. In a compromise, banking regulators now agree that the final measure should only demand collateral from an affiliate trading with a U.S. bank unit, said the people, who requested anonymity because the rule hasn't been released publicly.