July 3 (Reuters) - The European Union's executive body published its policy proposals on Friday to make the vast $600 trillion global derivatives markets safer for investors.
They stopped short of the more radical moves envisaged in the United States. They are part of a global effort to learn from the worst financial crisis in decades and reassure investors.
OVER-THE-COUNTER DERIVATIVES
The European Commission published its draft policy proposals on making the OTC derivatives markets safer through greater standardisation and central clearing of contracts.
The Commission will propose measures, which may include draft legislation, by the end of the year.
FINANCIAL SUPERVISION
The European Commission has proposed setting up a series of pan-EU supervisory bodies to oversee systemic risk and improve consistency in applying EU rules in day-to-day supervision.
EU leaders endorsed the plans last month with some changes to ease British concerns, though the overall thrust is still intact.
Commission to draft laws in the autumn to put plans into effect during 2010. Will need adoption by EU states and European Parliament to become law.
BANK CAPITAL AND LIQUIDITY RULES
The Commission working on a proposal for tougher bank capital rules regarding trading books that includes giving supervisors powers to intervene if remuneration policies encourage too much risk-taking.
Publication has been delayed due to an internal spat inside the EU executive over whether supervisors should have powers to clawback bank bonuses.
The bloc has just adopted an initial batch of tougher bank capital rules that take effect in 2010. Banks must retain 5 percent of the securitised products they sell in order to encourage high underwriting standards. New colleges of supervisors will be set up for all big cross-border banks to ensure national regulators work more closely.
Commission to propose third round of capital reforms in autumn that is expected to include liquidity requirements, simple cap on leverage.
Britain unilaterally introducing tough new liquidity requirements on banks operating in Britain from October.
Switzerland, not an EU country, is adopting rules that will force UBS and Credit Suisse to have higher capital buffers from January 2013. They will also have to comply with a leverage ratio and show their liquidity can withstand crises.
EARLY INTERVENTION
European Commission is due to publish White Paper on tools for early intervention in crises but no date has been fixed. It is not expected to tackle sensitive issue of burden sharing or who bails out a cross-border bank.
HEDGE FUNDS AND PRIVATE EQUITY
The European Commission has proposed a draft law that will require hedge funds to register and disclose information on leverage if they want to operate in the EU. The proposal also introduces transparency requirements on private equity groups. EU states and the European Parliament have the final word. Hedge funds and Britain say the proposal goes too far while socialists in the EU assembly and France want tougher rules.
REMUNERATION
The European Commission has issued non-binding guidelines on bankers' remuneration and updated existing guidelines on directors' remuneration first issued in 2004, which had been largely ignored by member states.
CONSUMER PROTECTION
The European Commission has outlined proposals to improve the protection of investors buying financial products. The proposals set out a sector-wide approach to consumer protection to replace the patchwork of different safeguards under various EU laws. The Commission wants a similar set of information for investors for all types of financial products.
CREDIT RATING AGENCIES
The EU has adopted a law introducing mandatory registration and direct oversight of credit rating agencies by national securities watchdogs.
INSURANCE
The EU has adopted the Solvency II rules -- an overhaul of how insurers make sure they have enough capital to cover risks.
SHORT SELLING
EU national regulators plan to forge a common approach to short selling.
MARKET ABUSE RULES
The Commission has announced that EU rules aimed at stamping out market abuses such as share price manipulation and insider dealing need toughening in light of the credit crunch.
(Reporting by Huw Jones, editing by Toby Chopra)