WASHINGTON - Congress' chief architect on financial regulation said on Wednesday companies that use derivatives to hedge their risk would not be forced to comply with all the new rules for the $450 trillion private swaps market.

House Financial Services Committee Chairman Barney Frank said he does not expect Congress to mandate companies to process their swaps through central clearinghouses, which assumes the risk if one party defaults.

I don't think you're going to see that happen because of the response that many will have, Frank told the U.S. futures market regulator the Commodity Futures Trading Commission, which has been urging all swaps to be cleared.

Frank said there would be a presumption that standardized contracts would be sent to clearinghouses but that it would not be an iron clad rule. The Obama administration wants clearing to be mandatory.

With only a few days left to voice complaints, some of the world's largest companies that use derivatives and federal market regulators pushed Congress for changes to a draft bill.

The House financial panel has tentatively scheduled a three-day bill drafting session for next week, where it is likely to vote on the new derivatives rules.

The White House and regulators are pushing reforms to remove excessive risks from the derivatives market, after a type of derivative known as credit default swaps nearly toppled insurer AIG Inc and wreaked havoc on the global financial system.

The financial services panel already has exempted some derivative swaps from processing by a central clearinghouse, which assumes the risk if one party defaults.

That has rankled CFTC Chairman Gary Gensler who told Congress that clearing is essential to lowering risk and should be the norm.

The only party that could be opposed is Wall Street, because right now they have all the information,' he said, adding that exchange trading helps all market participants by setting prices and terms publicly.

The CFTC and stock market regulator the Securities and Exchange Commission would both oversee the swaps market under the House draft bill.

Both regulators pushed for more robust rules and warned that the bill could allow market participants to shop for the weakest rules.

The financial services panel is holding a hearing on Wednesday to examine the draft bill.

The committee has already moved away from early plans to curb speculation in the $39 trillion credit default swaps market and prohibit investors from speculating on a borrower's creditworthiness.

The draft bill recognizes that many companies use derivatives for managing risk and does not require the use of only cash as collateral on customized derivatives, an issue for larger companies.

Capital requirements should clearly recognize and reflect the internal risk management processes utilized by dealers, Jon Hixson, Cargill's director of government relations, said in prepared remarks to the panel.

(Editing by Neil Stempleman)