UPDATE 2-EU's Barnier to propose more rating agency rules

* Barnier:will push for more legislation on rating agencies

* To propose new rules to avoid financial crisis in weeks

* To have proposal on naked short selling by year end (Adds details on naked short selling, byline)

NEW YORK, May 10 (Reuters) - The European Union’s financial markets chief said on Monday he will push for new legislation to increase competition among rating agencies which many EU leaders accuse of aggravating the Greek debt crisis.

Speaking to reporters in New York, Michel Barnier also promised to come up with new proposals to prevent future financial crisis in the next few weeks, including the creation of a fund for future bailouts.

“We are ready to accelerate the reform agenda, as requested by the heads of state,” Barnier said after meeting with financial industry executives at the New York Stock Exchange.

During the weekend, European finance ministers agreed to make rapid progress on financial market regulation.

The legislation on rating agencies, which angered EU officials when downgrading Greece in the past few months, would be on top of new rules that the European Union plans to implement this year.

“We have to measure the effects of the legislation that will be implemented this year,” Barnier said, adding the sector lacks transparency and competitiveness.

“There are too few agencies in too few hands,” he said. “We’ll work with the players of the sector to increase competitiveness.”

Referring to the recent downgrades of Greece’s credit ratings, Barnier said the agencies did not take into enough consideration the fact that Greece is backed by the European Union.

“Analyzing the ratings of Greece, which is part of a solidarity group, as Greece doesn’t’ stand alone, is not the same as assessing the rating of an isolated country,” he said.

Echoing Barnier’s comments in New York, the European Union’s economic policy chief Olli Rehn said in Brussels the EU Commission was pondering the idea of creating an European rating agency. For details, see [ID:nBRU010812].


Barnier also said he will unveil in the next three to four weeks new legislation aimed at preventing financial crisis, including the issue of a “resolution fund” -- one that would keep the proceeds from a tax imposed on banks.

France, Germany and Britain have called for the imposition of a new bank tax that would reflect the risks posed by different financial institutions. Germany wants the levy to go into a special bailout fund, but France and Britain want the cash for general national coffers.

Barnier reiterated he will propose reforms for the derivatives market this summer, “probably in July,” in parallel to U.S. reforms for the sector.

After that, he promised to work on a specific bill on naked short selling -- which happens when an investor sells a security, in a bet the price will go down, without owning it first.

“The commission will have a proposal to revise market rules (on naked short selling) before the end of the year,” he said, adding that European policy makers will be very “careful” to ensure convergence with U.S. rules.

The EU commissioner is expected to meet U.S. regulators in Washington on Tuesday, including U.S. Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Mary Schapiro.

Editing by Andrew Hay