Derivatives debate splits US and Europe regulators

To European officials, financial derivatives are dangerous weapons that worsened Greece's debt crisis and should be curbed.

To Wall Street, they're tools that reduce risk and generate profits and should be left alone.

Now, regulators on both sides of the Atlantic are trying to figure out who's right and what to do about it. At stake are billions in profits that banks say would be threatened by too much regulation. Yet supporters of tougher rules say the global financial system is at risk as long as derivatives remain largely unregulated.

Derivatives are instruments whose value depends on an underlying asset, such as mortgages or stocks. They can …