BRUSSELS - The European Community needs no special laws to cope with the growth in derivative products, according to a European Parliament report due to be finalized later this month.

The report on financial stability and the regulation of the community's markets, being reviewed by the parliament's legal affairs committee, says there should be "careful consideration of the existing regulatory framework and practice before the introduction of more rules which may inhibit further development of useful financial instruments."

But the report by Georgios Zavvos, a member of the parliament, calls for a number of other initiatives to strengthen the community's financial services system.

These include: harmonizing the "fit and proper" criteria applied to test the suitability of shareholders of banks licensed by the European Community, effective supervision of financial conglomerates, and better rules on the reorganization and liquidation of banks.

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