Here is what needs to be addressed:

RISKY BUSINESS It was never going to be easy to rein in the multitrillion-dollar market in unregulated derivatives. The Senate bill went further than the House version in requiring most derivatives to be traded on exchanges and to be processed, or cleared, through a third party to guarantee payment in the case of default.

It still has a gaping loophole: regulators have no clear legal authority to stop or undo a derivatives deal that has not been properly cleared and exchange-traded. The House bill gives regulators more authority, but a final bill needs clear rules, with clear enforcement.

The Senate bill also waters down the “Volcker rule.” As proposed by President Obama, the rule would bar banks from making market trades for their own accounts and from owning hedge funds and private equity funds. The Senate calls for a study and a needlessly long implementation process. The House version — which was passed before the Volcker rule was proposed — only gives regulators the discretion to curb risky trading. The final bill should implement the Volcker rule without delay.

TOO BIG TO FAIL Both the House and Senate bills establish “resolution” procedures for dismantling firms if their failure threatens the system. The goal is to establish in law that stockholders and unsecured creditors — not taxpayers — will bear the losses of a failure.

The resolution power in the Senate bill is weaker than the House bill because it does not require banks to pay in advance to help cover the operational costs of dismantling a big institution. (The House bill would create a $150 billion fund.) By making banks pay for the risks they create, a resolution fund could also perform the important function of encouraging them to curtail their riskiest activities.