UPDATE 2-EU’s Barnier to propose more rating agency rules

* Barnier:will push for more legislation on rating agencies

* To propose new rules to avoid financial crisis in weeks

* To have proposal on naked short selling by year end
(Adds details on naked short selling, byline)

By Walter Brandimarte

NEW YORK, May 10 (BestGrowthStock) – The European Union’s financial
markets chief said on Monday he will push for new legislation
to increase competition among rating agencies which many EU
leaders accuse of aggravating the Greek debt crisis.

Speaking to reporters in New York, Michel Barnier also
promised to come up with new proposals to prevent future
financial crisis in the next few weeks, including the creation
of a fund for future bailouts.

“We are ready to accelerate the reform agenda, as requested
by the heads of state,” Barnier said after meeting with
financial industry executives at the New York Stock Exchange.

During the weekend, European finance ministers agreed to
make rapid progress on financial market regulation.

The legislation on rating agencies, which angered EU
officials when downgrading Greece in the past few months, would
be on top of new rules that the European Union plans to
implement this year.

“We have to measure the effects of the legislation that
will be implemented this year,” Barnier said, adding the sector
lacks transparency and competitiveness.

“There are too few agencies in too few hands,” he said.
“We’ll work with the players of the sector to increase

Referring to the recent downgrades of Greece’s credit
ratings, Barnier said the agencies did not take into enough
consideration the fact that Greece is backed by the European

“Analyzing the ratings of Greece, which is part of a
solidarity group, as Greece doesn’t’ stand alone, is not the
same as assessing the rating of an isolated country,” he said.

Echoing Barnier’s comments in New York, the European
Union’s economic policy chief Olli Rehn said in Brussels the EU
Commission was pondering the idea of creating an European
rating agency. For details, see [ID:nBRU010812].


Barnier also said he will unveil in the next three to four
weeks new legislation aimed at preventing financial crisis,
including the issue of a “resolution fund” — one that would
keep the proceeds from a tax imposed on banks.

France, Germany and Britain have called for the imposition
of a new bank tax that would reflect the risks posed by
different financial institutions. Germany wants the levy to go
into a special bailout fund, but France and Britain want the
cash for general national coffers.

Barnier reiterated he will propose reforms for the
derivatives market this summer, “probably in July,” in parallel
to U.S. reforms for the sector.

After that, he promised to work on a specific bill on naked
short selling — which happens when an investor sells a
security, in a bet the price will go down, without owning it

“The commission will have a proposal to revise market rules
(on naked short selling) before the end of the year,” he said,
adding that European policy makers will be very “careful” to
ensure convergence with U.S. rules.

The EU commissioner is expected to meet U.S. regulators in
Washington on Tuesday, including U.S. Federal Reserve Chairman
Ben Bernanke and Securities and Exchange Commission Chairman
Mary Schapiro.

Investing Research

(Editing by Andrew Hay)

UPDATE 2-EU’s Barnier to propose more rating agency rules