EU to draft new rules, sanctions for derivatives

[May 17, 2010]  BRUSSELS (AP) -- The European Union's top financial official says he will draft new rules to create more oversight of derivatives trading blamed by some for worsening the financial crisis.

Financial services commissioner Michel Barnier says the new rules could mean fines for market abuse in what has been largely unregulated trading.

Barnier said at a Monday press conference that he would draft a separate law to regulate credit default swaps, a type of insurance against a borrower going bankrupt that have become a lucrative market for traders.

European leaders have complained loudly that credit default swaps on Greek government debt raised pressure on a vulnerable country as investors made bets that the country could default on its borrowings.

[Associated Press]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.