By Huw Jones
LONDON, Oct 13 (Reuters) - European regulators said on Wednesday there should be ambitious industry targets for shifting derivatives trading onto exchanges, a move the industry is likely to fiercely contest.
The regulators also recommended that further work was needed on whether trading curbs known as "position limits" -- a move being introduced in the United States -- worked in reducing volatility in market prices.
The Committee of European Securities Regulators (CESR) is advising the European Union on fleshing out a draft EU law to crack down on the opaque $615 trillion derivatives markets that lay at the heart of the financial crisis.
World leaders (G20) have called for trading of standardised contracts to be shifted onto exchanges or similar platforms, where appropriate -- a vague term which regulators are now trying to define.
"CESR does not yet have a definitive view on the exact levels that should be reached with regards to standardisation and trading on organised trading venues of derivatives currently traded over-the-counter," CESR said in a statement.
"However, CESR considers that a sufficiently ambitious approach should be adopted to increase both levels," it added.
The industry says mandatory exchange trading is unnecessary as central clearing and the reporting of trades will deal with regulators' concerns about transparency and risk.
From January CESR will become a more powerful European Securities and Markets Authority (ESMA) with powers to issue standards that are binding across the 27-nation bloc.
"CESR is of the view that, through target-setting, regulators should encourage increased trading of standardised derivatives on organised trading venues," CESR said.
"At this stage, CESR proposes that ESMA should be mandated to design, implement and oversee a system of targets in order to encourage increased trading of eligible derivatives on organised trading venues," it added.
"Where the targets are not met, ESMA... should take action to ensure their achievement by the industry," CESR added.
The watchdog includes national supervisors like Germany's Bafin and the Financial Services Authority from Britain.
It said the new breed of trading venues, known as multilateral trading facilities, that have sprung up to compete with exchanges in share trading "meet the full range" of functional characteristics needed for trading derivatives. (Reporting by Huw Jones, editing by Stephen Nisbet)