A bipartisan group of lawmakers supported the carve-out on a 301-124 vote.
Supporters say the exemption is necessary to allow U.S. firms to remain competitive in foreign markets. But opponents say the regulations outside the U.S. tend to be weaker and the exemption would put the broader financial system at risk.
Derivatives are investments whose value is based on some other investment, such as oil and currencies. The market was largely unregulated around the globe before the 2008 financial crisis and contributed to the meltdown.
The legislation's prospects in the Senate are uncertain. The White House has signalled it would veto the legislation.
Opponents said its passage could pressure regulators to take a more lenient approach in writing rules for oversight of foreign derivatives trading.
The White House said in a statement Tuesday that House passage of the bill "would be premature and disruptive" to the regulators' ongoing efforts to write the rules.
The legislation's primary authors were House Republicans, who opposed the 2010 financial overhaul legislation, but many Democrats endorsed it. A key thrust of the 2010 overhaul was to put new regulatory reins over derivatives, traded in a $700 trillion global market that has largely escaped supervision until now.
Derivatives are often used to protect an investor against future price fluctuations of an underlying commodity or security. But they also are used by financial firms to make speculative bets, and they have grown increasingly complex and risky.
Five of the biggest U.S. banks — JPMorgan Chase & Co., Goldman Sachs Group Inc., Bank of America Corp., Citigroup Inc. and Morgan Stanley — account for more than 90 per cent of total derivatives contracts. A large proportion of derivatives are traded outside the U.S., estimated by regulators at around 40 per cent to 45 per cent of the total.
The Commodity Futures Trading Commission has proposed putting under its supervision all derivatives trading, including trading overseas. But the Securities and Exchange Commission has taken a narrower approach, allowing overseas derivatives trades to escape U.S. regulation if the country in which they occur has a rules system that is roughly equivalent to that of the U.S.
The bill would require the two agencies to issue a joint rule. And trading in the nine biggest foreign markets for derivatives would be exempt from U.S. regulation.
That would "drag that activity back into the shadows," said Rep. Maxine Waters of California, the senior Democrat on the House Financial Services Committee, in debate before the vote.
"We'll be put in the position of bailing out failed institutions all over again," Waters said. "We shouldn't have to rely on foreign regulators to protect us."
Opponents pointed to the $182 billion federal bailout of American International Group Inc. at the height of the financial crisis — the largest for any company. AIG nearly collapsed because of its massive derivatives bets on the housing market. It has since repaid the bailout.
The new legislation would undermine the 2010 financial overhaul and "create a loophole big enough to drive an AIG truck through," said Rep. Carolyn Maloney, a New York Democrat.
But a supporter, Rep. Randy Neugebauer, R-Texas, said the bill would "bring some certainty to a very uncertain process."
Rep. Jeb Hensarling, R-Texas, the Financial Services panel's chairman, said the nine countries where trading would be exempt from U.S. regulation have systems of rules for derivatives that are closely equivalent to the U.S.
Having certainty in the rules would help companies that use derivatives to hedge against risks, Hensarling said, naming Coors, Southwest Airlines and John Deere as examples. That would help economic growth and jobs, he said.