* New rules aimed at limiting risk in swaps market
* Goal to implement swaps reforms unlikely before year end
MEXICO CITY, Nov 5 (Reuters) - International groups tasked with safeguarding the world banking system conceded they would miss a deadline for new rules aimed at limiting risk and boosting transparency in the $648 trillion over-the-counter swaps market.
At a meeting of the Group of 20 leading economies in Mexico City, the head of the G20's regulatory arm said the goal of having strong global swaps reforms in place by the end of 2012 was not in the cards.
``We are going to use all the time that is left in 2012 to get as much done in 2012 and then take stock instead of what remains to be done in a reasonable time frame,'' Financial Stability Board chief Mark Carney told reporters.
With memories of the 2007-2009 financial crisis still raw, the G20 agreed in late 2009 that derivatives like interest rate swaps and credit default swaps should be traded on electronic platforms, centrally cleared and recorded, by the end of 2012.
The FSB, the group's regulatory arm , has been tracking each country's progress on implementing the rules.
In a communique, the G20 economies stuck to an end-of-year deadline for new bank capital rules but acknowledged that cross-border disputes had hampered timely implementation of the swaps rules.
``We agree to put in place the legislation and regulation for OTC derivatives reforms promptly and act by end-2012 to identify and address conflicts, inconsistencies and gaps in our respective national frameworks, including in the cross-border application of rules,'' the leaders said.
The swaps rules were a key response to the 2007-2009 financial crisis, which was fueled by risky derivatives trading at firms like insurer American International Group that led to multi-billion dollar taxpayer bailouts.
One of the biggest sticking points has been an American bid to regulate swaps activity in other countries if it impacts U.S. commerce or financial stability.
Finance ministers from Britain, France and Japan asked the U.S. Commodity Futures Trading Commission last month to curb the cross-border reach of its new derivatives rules amid signs that the global derivatives market was already fragmenting.
Some market participants are choosing non U.S. banks to avoid the cost and red tape of having to comply with U.S. and their own domestic rules.
Carney, who also heads Canada's central bank, said the next few weeks would be important for resolving the cross-border disputes, especially between the United States and Europe, where the bulk of derivatives trading takes place.
He added that discussions soon would be held to thrash out differences and that the FSB ``will take an active interest in trying to encourage that part.''
Despite the hiccups, Carney pointed out that key pieces of infrastructure mandated by the regime - such as central counterparties to back trades and swap data warehouses meant to collect transaction data - are already in place.
A regulatory official , who could not be quoted on the record, said G20 leaders had discussed the cross- b order aspects of swaps regulation during the meetings, but that much of the decision making would have to take place at a lower level.
The official said the it was not the FSB's job to ``micro-manage.''