Companies using trillions of dollars of derivatives contracts to hedge interest rate, currency and commodity price risks could face higher costs under the proposed overhaul of US rules on derivatives, industry officials say.

Derivatives are widely used by the world's biggest companies to manage all kinds of financial risks. Most of these hedging activities are done between companies and banks in the over-the-counter (OTC) market.

Tim Geithner, US Treasury secretary, last week unveiled sweeping reforms, including a proposal to require clearing of all standardised derivatives through regulated central counterparties. Another proposal calls for making derivatives dealers and “other firms” – which may include non-financial companies – subject to capital charges against their positions.