The US should have only two, or at most three, independent regulatory bodies overseeing America’s financial system instead of the current antiquated patchwork of regulators, according to a “blue ribbon” panel of leaders from the investment community, business, finance and academia.

PARIS – Moves by European regulators to examine the issue of ‘short’ selling seem set to stir a controversy that flared at the worst point of the financial meltdown, in the early autumn, when many governments decided to ban this practice, at least temporarily. In late December, the Paris-based Committee of European Securities Regulators (CESR), which advises the European Commission on financial market regulation, issued a call for evidence on how the practice of short selling should be treated.

WASHINGTON – The New Year has started with a strong warning from the Institute of International Finance (IIF) that recent improvements in financial markets are unlikely to be sustained in the face of deepening recession and profit deterioration. This warning comes in the January issue of the closely followed Capital Markets Monitor, published by the Washington-based IIF, a global trade association representing some 400 financial firms.

HONG KONG – Some regulators now accept that financial innovation and financial sector growth must advance at a slower pace in future for the good of the financial system in the longer term. This was made clear in mid-December by Mario Draghi, governor of the Bank of Italy, and chairman of the Financial Stability Forum (FSF), the Basel-based body of central bankers, supervisors and national finance ministry officials that is coordinating the international policy response to the global financial crisis.

PARIS – Less than 18 months after European regulators decided that there was no case for regulating bond market transparency, the subject is back on the agenda. In late December, the Committee of European Securities Regulators (CESR), which advises the European Commission on securities markets, launched a consultation on transparency in non-equity markets. This time the focus is not only on cash bonds, but also on credit derivatives and structured finance products, such as asset-backed securities and collateralised debt obligations.

BASEL – Global banking regulators say the financial crisis has exposed four broad areas of weakness in the way banks used stress testing as a risk management tool prior to the start of the turmoil.

LONDON – First research by a new UK government sponsored think-tank on financial regulation is expected to be published in time for the Group of 20 summit in April.

LONDON – Remarks by French and German leaders apparently intended as a warning to the incoming US administration that Europe wanted to “set the agenda” for the financial crisis summit in London in April are seen by British officials as typical of the manoeuvring that develops ahead of such gatherings.

BASEL – In a move reflecting the impact of the global financial crisis on the perspective of supervisors, global banking regulators are broadening the scope, and giving a new name, to a key working group.

GENEVA, Switzerland – The troubles of American International Group (AIG), the insurance giant bailed out by the US government last year, teach the need for insurance supervisors to monitor intra-group liquidity very closely, according to a top European regulator.