A draft of the "Green Paper" or discussion paper seen by Reuters is due to be approved by the bloc's executive European Commission on February 18.
It outlines a welter of changes that may be needed so that markets, rather than banks, become the main mechanism for raising funds to help the region's flagging economy grow, including stronger EU-level supervisory powers.
"In the context of capital markets becoming increasingly integrated, further consideration could be given to the role played by the European supervisory authorities (ESAs)," the green paper seen by Reuters said.
"To the extent the national supervisory regimes may result in differing investor protection standards... there may be a further role for the ESAs to play in increasing convergence."
Britain has said no institutional changes are needed to the existing system of EU markets supervision in a capital markets union.
(Reporting by Huw Jones, editing by Carolyn Cohn)
