WASHINGTON — The Treasury Department wants a central electronic-based system to track the buying and selling of over-the-counter derivatives, a class of financial instruments that includes the risky contracts that helped bring down the giant insurer AIG, according to a draft letter to Congress.

The letter says the goal is to bring transparency to the shadowy market. Doing so would deter financial firms from taking undue risk, prevent fraud and ensure they are marketed appropriately, the letter states.

Current law largely excludes the privately traded derivatives from regulation.

"All OTC derivatives dealers and all other firms whose activities in those markets create large exposures to counterparties should be subject to a robust regime of prudential supervision and regulation," the letter states.