EU Executive Proposes Raft Of New Financial Rules

`There should be no financial entity that escapes from financial regulation, neither in Europe nor the rest of the world,` Barroso said.

The European Union's executive arm proposed a raft of measures on Wednesday to make financial markets and institutions safer for investors.

The worst financial crisis in decades has helped tip the 27-country bloc's economy into a downturn and push up unemployment, sparking a radical global rethink of how markets and banks are regulated.

"Our message is clear. We must send a strong signal to our citizens, businesses and the global community that there is a way out of this crisis," European Commission President Jose Manuel Barroso told a news conference.

The measures, to be presented to EU leaders later this month for broad endorsement, are in line with a draft of the plan obtained by Reuters on Tuesday.

They are also part of the EU's response to moves by the G20 group of industrial and big emerging countries towards a global approach to reforming financial rules.

Measures in the Commission's package range from tougher bank capital rules to streamlining supervision, more transparency in derivatives markets and proposals to ensure bank remuneration policies do not encourage excessive risk-taking.

"There should be no financial entity that escapes from financial regulation, neither in Europe nor the rest of the world," Barroso said.

"All financial entities should be subject to a certain degree of regulation and supervision. No territory, state or individual can separate and work underground," Barroso said.

The measures will be formally proposed in draft law form over the rest of 2009 and need backing from the European Parliament and EU governments to become law.

ACCELERATED LAROSIERE

The centrepiece is a move to introduce pan-EU supervision so regulators can spot threats to financial stability more quickly and stop problems escalating.

A high-level group headed by a former Bank of France governor, Jacques de Larosiere, last week recommended setting up two new pan-EU supervisory bodies.

The first would be hosted by the European Central Bank to monitor system-wide risks, the second to monitor day-to-day supervision of banks, insurers and markets.

De Larosiere recommended introducing the new system over three years but the Commission wants to skip the phase-in.

"We are suggesting this should be done immediately. If we don't do it now we will never do it. We cannot postpone the reform," Barroso said.

Although havens that allow EU citizens to dodge the taxman are not directly addressed in the Commission's package, Barroso hoped the G20 meeting in London next month would be able to adopt measures.

"I hope the EU will be in the avant-garde of the struggle with uncooperative tax jurisdictions," Barroso said.