Brussels - At Friday's European Union summit on the reform of global financial markets, the French government, which holds the EU's rotating presidency, proposed five guidelines for future action which it wants EU states to back at a global summit on November 15.

TOTAL REGULATION: "No financial institution and no market segment must escape regulation or supervision," the paper says.

That includes institutions "everywhere, including offshore centres," the paper says in a list of fundamental principles.

EU member states agree that the world's financial system needs more regulation, but the sweeping nature of the French proposal is likely to provoke opposition from both EU and world powers which are major financial centres, such as Britain and the United States.

TARGET THE RATING AGENCIES: Rating agencies, widely accused of missing the warning signals of the credit crunch, should be made "subject to registration, supervision and governance rules."

No EU member state has yet spoken out against this proposal, and many have supported it, making it likely that this will be a key plank of any coordinated EU reform proposal.

MANAGE THE MANAGERS: Any financial reform "must be based on the principles of accountability and transparency on the part of the actors," such as bank executives.

The world should therefore make its top managers sign up to a code of conduct "to avoid excessive risk-taking", and companies should change their pay scales to reward long-term profits, the paper says.

Member states have broadly supported this idea, fulminating over failed managers who nonetheless received multi-million-dollar pay-offs. However, it remains to be seen how it could be enforced, especially in financial hubs such as New York and London.

PROPER ACCOUNTING: International accounting standards should be updated and harmonized to make sure that banks know exactly what their assets are worth and that no country enjoys an unfair advantage. EU states widely support this view.

BOOST THE IMF AND FSF: The final proposal concerns the International Monetary Fund (IMF) and the Financial Stability Forum (FSF), which is made up of the world's leading central banks and finance ministries.

Both should be strengthened and mandated to "recommend the measures to restore confidence and stability," the proposal says.

While EU member states back both ideas in principle, the call to strengthen the FSF is, at least, ironic.

The body was created in 1999 after the Asian financial meltdown to "promote international financial stability ... and reduce the tendency for financial shocks to propagate from country to country," - a mission in which it has been spectacularly unsuccessful. (dpa)