EU executive to crack down on derivatives risk

Published: 19 Oct 2008 16:59:44 PST

BRUSSELS, Oct 17 - The European Commission said on Friday it intends to make proposals to control risks in the $60 trillion credit derivatives market, seen as one of the causes of the worst financial crisis in 80 years.

"Regulators need to have a much better view of where the real risks in these instruments lie," EU Internal Market Commissioner Charlie McCreevy said in a statement.

"I would like to have by the end of this year concrete proposals as to how the risks from credit derivatives can be mitigated," McCreevy said.

The contracts are traded over-the-counter or off an exchange, and therefore more lightly regulated with risks less controlled.

Contracts could be standardised more, McCreevy said.

"But there is a far more pressing need and that is to have a central clearing counterparty for these derivatives," he said.