FSB Toronto meeting "substantive" ahead of G20

TORONTO (Reuters) - The Financial Stability Board's latest meeting made enough progress for G20 leaders to make real decisions on financial reforms at this month's summit in Toronto, Chairman Mario Draghi said on Monday.

"It was a substantive meeting of preparation for the summit ... we prepared the ground for our leaders to take decisions in the area of regulatory reform," he told reporters after the meeting, which was interrupted near its end by a small fire at the venue.

"We made good progress in the area of reform of Basel II and in the area of what to do with systemically important financial institutions, especially in the area of infrastructure, market infrastructure consolidation with respect to OTC derivatives trading."

They also discussed ways to reduce the probability and scope of large bank failures, he said.

The FSB is mandated by the G20 -- which meets June 26 & 27 -- to coordinate financial sector policies among the world's largest industrial and emerging economies. These include reforms of bank capital requirements being overseen by the Basel Committee.

A planned formal media briefing and statement were canceled after a kitchen fire sent attendees -- which also included Bundesbank President Axel Weber and Reserve Bank of Australia Governor Glenn Stevens -- out of the building as fire trucks converged.

Draghi, who said he saw smoke during the evacuation, said the FSB's business was concluded by the time the alarm sounded.

He did not take questions from reporters.

The United States and EU are working on a package of new global rules governing banks, derivatives trade, hedge funds and other parts of the complicated capital markets, aimed at avoiding future crises.

But the G20 meeting comes amid disagreement among member countries on the best approach to financial reform in some areas, such as a proposed bank tax, and a U.S. plan to ban risky proprietary trading at some banks, which the EU has rejected.

Industry heads warned last week policy makers reacting to the global financial crisis should avoid a "one size fits all" mentality of drafting rules that some fear could have adverse economic effects.

(Reporting by Cameron French and Jennifer Kwan; Additional writing by Jeffrey Hodgson; Editing by Richard Chang)

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