(Adds attorney comment)

NEW YORK, Nov 10 (Reuters) - Contracts in the $450 trillion derivatives markets would need to be cleared through central counterparties unless exempted by U.S. regulators under a financial regulation reform bill introduced on Tuesday.

Under the legislation proposed by Senate Banking Committee Chairman Christopher Dodd, swaps that are cleared also would have to be traded on regulated exchanges or electronic platforms.

The two steps of clearing and on-exchange trading are meant to lower risks of another financial system meltdown. For details, see [ID:nN10327951].

The bill calls for all swaps to be cleared in central counterparties unless exempt by the Securities and Exchange Commission, which oversees equities, and the Commodity Futures Trading Commission, which regulates futures markets.

The regulators could exempt swaps from central clearing if no central clearinghouse accepts the swaps, or if one of the counterparties to the trade is not a dealer or a major swap participant.

The Dodd bill in many cases replicates bills approved by two House committees, the Financial Services Committee, which is chaired by Barney Frank, and the Agriculture Committee, which is chaired by Collin Peterson.

There are, however, some differences.

"The Dodd draft follows the original Frank proposal in so far it says the clearing corporations first propose what has to be cleared, and then there's a regulatory review process that follows," said Paul Forrester, a partner at law firm Mayer Brown in Chicago.