The European Union's proposals to revamp the derivatives sector are actually likely to benefit the banks that are already too big to fail, Satyajit Das, risk consultant and author of "Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives," told CNBC Thursday.
The proposals, outlined by EU Services Commissioner Michel Barnier, introduce clearing houses for derivatives, which make up a $600 trillion market of over-the-counter instruments which has been criticized as opaque.
"One of the most amusing things about this proposal is that everybody thinks that it's bad for the banks; but really what it is, is it's going to enshrine the power of a very, very elite group of dealers," Das said.
Small banks will not have the volume to invest in clearing houses of their own, while big banks will become strong, dominant clearers charging commission for the use of their services, he predicted.
"So the JPMorgans , the Deutsches, the Barlcays , the Goldman Sachs of the world must be sitting there leaning back and saying hey, we've lost some revenue in some places but we are going to make it up," he said.
The model advanced by the EU for the clearing houses for derivatives is "fatally flawed" because it is too vague, according to Das.
According to the model, only standardized products can be used in clearing houses, but these products are not defined, he said.
There will be experts who will be able to make instruments more complicated so they could still be traded over the counter, Das said.
After such a change, a product "will do exactly the same thing but it will be so bespoke you won't be able to treat it as a standardized product," he explained.
The number of entities that have to go to clearing houses will also be a problem, as the EU has said end-users of derivatives will not have to be members, he said.
"If you have commercial risk you don't go on, but who does that include? Does that mean that Enron doesn't have to go on?" Das said.
"It's going to be a lot of problems with this, which I don't think frankly have been thought through properly," he added.