EU states and the European Parliament have cancelled Monday's talks aimed at striking a deal to tighten laws on the $700 trillion derivatives market, after the states failed to settle on a negotiating position.
The EU, the United States and other leading economies in the world agreed in 2010 to finalize a coordinated crackdown on derivatives by December, but that deadline is now looking tight.
The meeting for Monday has been cancelled. No new date has yet been set, an EU diplomat close to the negotiations said.
EU member state ambassadors failed on Thursday to agree a common position ahead of Monday's final round of negotiations with parliament on a definitive legal text.
The aim now is for EU finance ministers, who hold their regular monthly meeting in Brussels on Tuesday, to try and break the deadlock among states so that a rescheduled meeting with parliament, which has joint say, can take place.
Germany is against giving binding mediation powers to the European Securities and Markets Authority (ESMA) in disputes between national regulators.
The draft law says firms from outside the EU can do business in the bloc if their home regulatory regime is equivalent, or just as strict.
Britain wants an amendment to say this requirement should not be cut and pasted into a slew of other EU rules in the pipeline, while France is resistant to such an amendment.
The draft law aims to push swathes of the $700 trillion over-the-counter (OTC) derivatives trading into clearing houses that are backed by a default fund in case one side of the trade goes bust.
All transactions would be recorded at a trade repository so regulators have a snapshot of who is exposed to which contract. The aim is to avoid the data black hole that regulators encountered when U.S. investment bank Lehman Brothers went bust.
(Reporting by Huw Jones; Editing by Will Waterman)