Derivative reforms key for US economic recovery-Gensler

NAPLES, Florida Jan 29 (Reuters) - Greater central clearing and transparency of privately traded derivatives are vital to reforming the $450 trillion markets, which were a key cause of the recent financial crisis, Commodities Futures Trading Commission Chairman Gary Gensler said on Friday.

Central clearing, in which a counterparty stands between two trading partners and guarantees the trade, is needed to remove the risks of derivatives from banks, which are typically riskier than exchanges because they also have large lending and trading operations, Gensler said. He was speaking at a conference hosted by the American Bar Association in Naples, Florida. (Reporting by Karen Brettell; Editing by Dan Grebler)