WASHINGTON (AP) — Federal regulators are moving toward imposing restrictions on the use of derivatives by mutual funds, aiming to protect investors in funds that rely on the high-risk transactions.

Members of the Securities and Exchange Commission voted 3-1 at a public meeting Friday to propose the limits on derivatives use by mutual funds as well as exchange-traded funds. ETFs, which have been growing in popularity, track a market index or basket of stocks and trade through the day.

The proposal goes out for public comment for 90 days, and it could be formally adopted by the SEC sometime after that.

Derivatives are investment tools whose value stems from an underlying investment such as oil, stocks or interest rates. Traded in a $600 trillion global market that wasn't regulated, they were a central factor behind the financial crisis that erupted in 2008. Derivatives were brought under federal supervision in the 2010 law overhauling regulation of the financial markets.

Derivatives can be used to hedge against risks, but they also are used by financial firms to speculate. Derivatives trading can produce steep losses or huge profits, if the value of the underlying asset sinks or soars.

Investment funds — with about $67 trillion in assets managed by firms under SEC supervision — are relied upon by millions of Americans for their retirement savings.

"Inadequate controls on the use of derivatives can create significant risks for funds themselves and investors, as well as raise questions about the potential impacts on the broader financial system," SEC Chair Mary Jo White said before the vote.

Investment funds may use derivatives to score higher returns, to hedge risks in their portfolios or for other financial strategies.

An analysis by SEC economists found that some funds rely heavily on derivatives, sometimes carrying up to 10 times as much in potentially risky investments in their portfolios as their total amount of assets. Most mutual funds don't use them extensively. The ones that do face increased risks of big, rapid losses from derivatives investments, potentially hurting investors, the SEC says.

SEC Commissioner Luis Aguilar said ordinary investors, who may find it hard to understand complex fund strategies, can especially be at risk.

Under the new proposal, mutual funds and ETFs also would be required to adopt new measures to control financial risks.

Funds would choose one of two ways to restrict their use of derivatives. One is by limiting the amount of derivatives transactions in the fund's portfolio to 150 percent of total fund assets. The other would allow that amount to reach as much as 300 percent of assets, provided that the fund pass a "test" showing that its portfolio is less risky overall with derivatives transactions included than if it had none.

Commissioner Michael Piwowar, a Republican, voted against the proposal. White is an independent; Aguilar and the fourth commissioner, Kara Stein, are Democrats.

The trade group representing the mutual fund industry was reserving judgment initially on the SEC plan.

"This proposal is complex and it will take the fund industry some time to fully assess its breadth and implications," Paul Schott Stevens, president of the Investment Company Institute, said in a statement.