FACTBOX-Main tasks facing European Parliament

July 13 (Reuters) - The European Parliament holds its first session on Tuesday since an election in June.

The parliament has three main roles -- passing European laws, democratic supervision of the other European Union institutions and exercising authority, with the Council of EU leaders, over the Union's budget.

The parliament shares power equally with the Council on about two-thirds of proposals for EU legislation under a procedure known as co-decision. In some fields, such as agriculture, economic policy, visas and immigration, the Council alone legislates but must consult the parliament.

The EU's annual budget is decided jointly by the parliament and Council, and a parliamentary committee monitors how the budget is spent.

Here are some the main tasks facing the parliament:



FINANCIAL REGULATION

Tightening regulation of the financial system to help prevent another global economic crisis is a priority for EU leaders. The parliament has already passed laws capping the amount one bank can lend to another bank at 25 percent of the bank's own capital and requiring banks to retain at least 5 percent of any high-risk securities they sell.

The executive European Commission is proposing a series of pan-EU bodies to oversee systemic risk and improve monitoring -- Britain has signalled its concerns but a draft law is due in late 2009. A separate draft law on supervision of hedge funds and more proposals for rules on banking capital requirements are also expected to go before the assembly.

The make-up of the assembly after the election will determine how it balances the potentially competing demands of tighter regulation with encouraging competition and innovation.

ENDORSING THE EU'S NEW POWER-BROKERS

The parliament, the only major EU institution that is directly elected, will have the final say in the make-up of the next European Commission and, if the Lisbon reform treaty comes into force, on the new roles of EU president and EU foreign policy chief.

While horse-trading among EU capitals usually determines the Commission president and the make-up of his or her team, the parliament is not afraid to reject the choices -- as it did in a 2004 row over comments made on homosexuality by an Italian nominee, the conservative Rocco Buttiglione.

The parliament veto forced EU Commission President Jose Manuel Barroso to propose a rejigged Commission without Buttiglione. It has delayed a vote of approval on Barroso's appointment for a new term until September at the earliest.

The assembly will be sure to pore closely over the choices of the two new Lisbon treaty posts. The holders of these posts could become the two EU faces most visible to the world.

THE EU BUDGET

EU governments will start debating next year an overhaul of the bloc's 125-billion-euro annual budget, expected to shift much spending away from agriculture towards research and innovation and change the way EU revenues are collected.

The parliament will have an advisory role in the talks, which have to be concluded by unanimity among governments before the end of the current long-term budget in 2013.

But once a general, political deal on the next multi-annual budget is translated into draft legislation, the parliament would be allowed to propose amendments without changing the general architecture of the deal.

If the Lisbon treaty takes effect, the parliament will have more say on spending levels on various areas in annual budgets.

ENVIRONMENT

While international efforts to find a successor to the Kyoto Protocol on global warming are now largely in the hands of national governments, the European Parliament will use its voice to try to ensure European leaders do not water down EU commitments to lead the world in cutting harmful emissions.

They will also help draft rules this year and next to curb fast-growing emissions from the EU transport sector, especially vans and trucks, and will help set ambitious new energy efficiency targets for new buildings.

UNCHARTERED TERRITORY

If the Lisbon treaty is ratified by all member states, it will give the European Parliament important powers covering the vast bulk of EU legislation. Although some areas such as defence and foreign policy will remain largely sacrosanct, the assembly will for the first time have an important say in EU legislation in the delicate area of justice and security policy -- although Denmark, Ireland and Britain have secured opt-outs from pan-EU action in these areas.

The Parliament would also have to endorse any EU trade deals and would have new powers in setting EU agriculture policy, one of the most sensitive areas of the bloc's activities.

(Compiled by Caroline Linton, Mark John and Marcin Grajewski) (Editing by Richard Balmforth)