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The former head of the U.S. futures market regulator said Wednesday that a draft bill proposed by Rep. Barney Frank (D-Mass.) represents a chance to revive "stalled" efforts to tighten oversight of off-exchange trading activity.

Walter Lukken, the former acting chairman of the Commodity Futures Trading Commission who now serves as a senior vice president for exchange operator NYSE Euronext (NYX), said he was hopeful the bill would pass in the coming weeks.

In remarks before a Chicago conference on corporate responsibility, Lukken credited Treasury Secretary Timothy Geithner for his department's proposal earlier this year to bring over-the-counter derivatives trade onto exchange platforms, but "unfortunately, that idea has stalled."

"But it's not too late to jump-start the idea," Lukken said, referring to the proposal from House Financial Services Chairman Frank.

The draft bill, circulated Friday, incorporates most elements of the Obama administration proposal, like requiring dealer banks and other major market participants to route standardized over-the-counter contracts through clearinghouses, which guarantee trades.

However, Frank's bill differs from the Treasury proposal in that it wouldn't mandate exchange trading of over-the-counter derivatives and would let many more companies qualify for exemptions from clearing requirements.

The proposal has met resistance this week from current CFTC Chairman Gary Gensler, who on Wednesday warned that it could let too many companies avoid clearing their swap transactions.

Henry Hu, head of the Securities and Exchange Commission's newly created division of risk, strategy and financial innovation, cautioned Wednesday that the SEC's anti-fraud capability could be weakened by Frank's bill. Hu also saw issues with dividing OTC oversight between the SEC and CFTC.

Frank said Wednesday that the bill remains a "work in progress" and that he hopes for a U.S. House vote in November.

Exchange companies like NYSE Euronext have been generally supportive of U.S. efforts to require more oversight of over-the-counter markets, and Lukken on Wednesday hailed the Obama administration's push to "bring large segments of the financial world out of darkness and into the sunshine."

Exchange leaders also see the shift of over-the-counter derivatives to centrally cleared platforms as a chance to expand their business, and are competing to set up facilities to handle products like credit default swaps, interest rate swaps and other customized financial instruments.

NYSE Euronext this summer shuttered a failed attempt to clear credit derivatives via a London-based facility, but may pursue the much-larger interest rate swaps market via a new clearinghouse the company is building with the Depository Trust and Clearing Corp.

Lukken said Wednesday that despite U.S. regulators' efforts in recent months to tighten oversight of financial markets, "the existing financial regulatory structure is rife with gaps," and still lacks a body to oversee systemic risk issues.

"This crisis has created a once-in-a-generation opportunity to modernize our outdated regulatory structure, and we must not let this opportunity pass," he said.

-By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com