The European Commission will review a voluntary code used by credit rating agencies as they appeared too slow in warning about problems in the US subprime mortgage sector.
After the collapse of energy trader Enron, global market watchdogs came out with a voluntary code to tackle what they saw as conflicts of interest in the sector, whereby rating agencies are paid by the firms they rate.
EU Internal Market Commissioner Charlie McCreevy had said he wanted to give the code time to prove itself but that the US subprime crisis has highlighted apparent failings.
"We are going to have to review the code and review the overall framework that applies to rating agencies and any gaps that need to be filled in," a commission source said.
The source said problems in the US subprime sector, which lends money to poorer families to buy homes, go back to last year at least as operators in the sector issued warnings.
Former Irish minister for finance Mr McCreevy is expected to reach a decision on whether to propose legislation sometime in 2008.
Global stock markets have fallen sharply in recent days as fallout from problems in the US subprime mortgage market continued to hit banks and hedge funds.
McCreevy will meet next month with the Committee of European Securities Regulators, which groups the EU's 27 national market watchdogs, to discuss the issue.