Key areas within European securities markets should be overseen by a single authority, according to one of the European Union’s senior financial regulators.

Eddy Wymeersch, head of the Committee of European Securities Regulators, told the Financial Times that, while a two-tier system of central regulation and local supervision was appropriate in many areas, there should be more flexibility to handle some matters at EU level.

His comments came ahead of the eagerly awaited publication on Wednesday in Brussels of recommendations on how to reform Europe’s fragmented system of financial supervision. These have been drawn up by Jacques de Larosière, a former head of the French central bank, with the help of seven senior industry figures.

The recommendations were requested by José Manuel Barroso, European Commission president, following the financial crisis. They will focus on issues of banking supervision, but the official brief encompasses “European supervisory arrangements covering all financial sectors”.

In the pipeline

●Better ways to assess systemic risks and threats to financial stability in Europe – possible suggestions could include new pan-EU bodies of supervisors and regulators from member states

●Better methods to deal with the supervision of large institutions, such as cross-border banks, or markets, whose failure could have systemic implications

●Ways to ensure EU rules are applied in a similar fashion by different national regulators – could involve an enhanced role for the three existing co-ordinating committees on banking, insurance and securities industries, which currently do not have binding powers

Observers predict support for more centralisation and integration. Some think that the report could suggest a number of pan-EU structures to better assess systemic risks and threats to financial stability in the region, although some of these could involve the revamp of existing bodies.

“He won’t be going for gradualism,” Karel Lannoo, chief executive of the Centre for European Policy Studies, a Brussels think-tank, predicted on Tuesday.

The Paris-based CESR comprises the national securities regulator in each member state and its role is to agree how to interpret rules emanating from Brussels.

Mr Wymeersch said that the committee should be given the power to make binding recommendations on how these interpretations were followed by each national watchdog, in the interests of more consistent implementation.

“At present, if member states don’t [adhere to a mutually agreed interpretation] there is nothing you can do,” he said.

Industry and regulators remain divided on necessary regulatory reforms, although many say there has been a perceptible shift in attitudes as the gravity of the current crisis has sunk in.

In the City of London, for example, the Association of British Insurers gave conditional backing to the idea of pan-European regulation this month, a shift from habitual British resistance.

UK officials, however, know they will have soon to take a more nuanced position as their counterparts discuss far greater co-ordination. UK industry’s interest in the European deliberations is also growing rapidly.

“The City is now realising these issues could have important consequences so they had best engage with the process,” said John Liver, of Ernst & Young.

“It is difficult to form a concrete position on many of these issues because they are complex and it takes time to get people’s views. There’s a thin red line of people involved in strategic thinking within financial services and they’re already very busy.”