UPDATE 4-US' Geithner seeks clampdown on derivatives dealers

* Geithner-Aims to prevent mark manipulation, other abuses

* Major dealers to be subject to supervision, regulation

* SEC, CFTC would impose recordkeeping, reporting rules (Adds Geithner quotes, background on SEC, CFTC roles)

By Rachelle Younglai

WASHINGTON, July 10 (Reuters) - U.S. Treasury Secretary Timothy Geithner on Friday proposed clamping down on dealers in freewheeling markets for derivatives, the little-understood, complex securities that helped create a crisis in U.S. and world financial markets.

In testimony before two congressional panels that will play a role in writing legislation on derivatives, Geithner set out proposals that would make big dealers like JPMorgan Chase (JPM.N) and Goldman Sachs (GS.N) subject to much stronger supervision.

"We propose to require all OTC (over-the-counter) derivatives dealers ... be subject to substantial supervision and regulation, including conservative capital requirements, conservative margin requirements and strong business conduct standards," Geithner said in comments that acknowledged there were few limits in the past.

The Obama administration is trying to bring about a sweeping overhaul of the U.S. financial regulatory system in the wake of a two-year old credit crisis that has hobbled economies worldwide.

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