The financial impact on banks of extra U.S. oversight of the over-the-counter derivatives sector will be mitigated by institutions' expanding partnership with exchanges.

While the exchange operators are targeting the OTC market to fill a gap left by falling volume in other products, banks have proved adept at winning a share of potential profits from the nascent business.

Large dealer banks had resisted efforts to shift trading and clearing of profitable OTC business to exchanges, before a push from global regulators intensified last year.

The U.S. Treasury plan unveiled Wednesday would force all "standardized" OTC contracts onto regulated exchanges providing centralized clearing.

Banks have succeeded in playing exchanges off against one another to secure equity stakes and revenue sharing deals in new clearing platforms for credit-default swaps, one of the first OTC classes to shift to exchange-based clearing.

ICE Trust, the CDS platform launched by IntercontinentalExchange Inc. (ICE), will cut 50% of revenues to bank members from next year.

CME Group Inc. (CME) has been forced to boost the equity stake offered to banks in its yet-to-be launched CDS platform from an initial 30% to more than 50%.

Eurex, the derivatives arm of Deutsche Borse AG (DB1.XE), is offering banks a 90% stake in its European-based CDS clearing platform.

While exchanges have been engaged in trying to clear OTC products for some time, the reluctance of banks to engage and lack of standardization of products has frustrated many efforts.

Alongside the various CDS initiatives, the larger interest-rate swap market is also being targeted by both CME and Nasdaq OMX Group Inc. (NDAQ).

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com