The European Parliament has formally approved measures to create pan-EU supervisors with sweeping powers over banking, securities and insurance firms.
MEPs voted to set up authorities in London, Paris and Frankfurt that would have powers to mediate between national supervisors and ban some transactions, such as naked short selling of shares and government bonds, in emergencies.
The European Commission proposed the new agencies last year as part of an overhaul of European regulation following the worst financial crisis since the Great Depression.
Today's vote in Strasbourg also paves the way for the creation of a European Systemic Risk Board, chaired by European Central Bank president Jean-Claude Trichet, to monitor markets and send warnings to EU nations on economic and financial risk.
The vote marks the end of months of negotiations to create what British chancellor George Osborne has called a "new financial supervision architecture for the EU".
The pan-European supervisory system is designed to establish close co-operation and co-ordination between national and European authorities to ensure the stability of the EU’s financial system, and close gaps in between different national regimes.
A new board made up of heads of European central banks will monitor and act against macro-economic risks as they emerge across Europe.
British Labour MEP Peter Skinner, one of five MEPs who negotiated the final deal on behalf of the 736-strong Parliament, commented: “This is good news for consumers, who can now be confident that the full force of EU law is there to support them, wherever a financial services provider may base its headquarters.
“The new rules will also benefit the financial services industry. It is not in their interests to have national regulators applying 27 different interpretations of EU rules. Whether we’re talking banking, insurance or capital markets, regulators can no longer act in silos but will have to coordinate their work.”
Bloomberg/PA