UPDATE 1-Key Republican senator snubs US Senate regulation bill

WASHINGTON Nov 19 (Reuters) - A key Republican Senator said on Thursday that he would not support a Democratic bill to overhaul the country's financial regulation.

Richard Shelby, the top Republican on the Senate Banking Committee that must pass the legislation, said the draft bill requires a "complete rewrite" and said Republicans planned to offer a substitute.

The Democratic bill announced by Senate Banking Chairman Christopher Dodd on last week would create a super cop to police banks and new agencies to oversee risk in the financial system and consumer protection.

Shelby said he agreed with some of the goals of the bill such as limiting the role of the Federal Reserve and shedding light on the $450 trillion over the counter derivatives market.

However, Shelby said the Democrat bill failed.

"The Dodd proposal claims to address excessive risk taking in the OTC derivatives market," he said. "The regulations imposed on the use of derivatives, however, will prohibit manufacturers and other companies from protecting themselves from many risks."

(Reporting by Rachelle Younglai)