Big banks are set to gain key concessions as the top U.S. derivatives regulator meets to vote on watered-down rules for swap trading that will chip away at Wall Street's dominance of the $630 trillion market.

The rules will allow banks to continue to negotiate deals over the phone, a practice critics say is hard to monitor, and lower the number of quotes investors need to get before entering a swap to move away from bilateral trading.

The Commodity Futures Trading Commission is writing a host of new rules based on lessons learned from the 2007-09 financial crisis, which highlighted the opacity of derivatives and triggered a regulatory crackdown.

On Thursday, the CFTC's five members - three Democrats and two Republicans - are expected to vote in a public meeting starting at 10 a.m. (1500 GMT) on new platforms for swaps that will bring bilateral trading to an end.

Bilateral trading, which is also seen as difficult to monitor, was blamed for exacerbating the crisis.

"We will bring to this once-opaque marketplace the transparency that Congress and President Obama laid out," CFTC Chairman Gary Gensler said on a call with journalists when presenting the rules on Wednesday.

The swaps market had modest beginnings in the 1980s, offering companies risk management tools, but rapidly started to attract speculators, causing it to mushroom out of regulators' sight in the following decades.

(Graphic with key metrics of the swaps market: http://link.reuters.com/beh28t)

In an important nod to an industry dominated by big banks such as Citigroup Inc, Bank of America Corp and JPMorgan Chase & Co, the CFTC will continue to allow swaps deals to be negotiated over the telephone.

Derivative brokers such as ICAP Plc, GFI Group Inc and Tullett Prebon Plc, which sign up for the bulk of trading between banks, had lobbied hard to retain so-called voice-broking, the core of their business.

The rules for the new platforms, called Swap Execution Facilities (SEF), were one of the last remaining building blocks in the CFTC's rules, which are part of the Dodd-Frank overhaul of the financial industry after the crisis.

Another compromise in the rules for SEFs was the minimum number of quotes that a prospective client needs to get before entering a swap deal, a requirement aimed at bringing more transparency to the market.

The rules set a minimum of three quotes in so-called request-for-quote trading systems after a one-year phase-in period when the minimum number of quotes is two. The CFTC had initially proposed a minimum of five quotes.

Critics of the industry had said the lower the number, the smaller the move away from bilateral trading.

(Reporting by Douwe Miedema; Editing by Lisa Von Ahn)