uly 29 (Bloomberg) -- The U.K. financial regulator proposed expanding the number of firms covered by rules on bonuses and compensation from 27 to 2,500 banks, building societies and hedge funds to comply with European Union legislation. The proposed compensation rules require that at least 40 percent of bonuses be deferred for at least three years and 50 percent of the bonuses should be paid in shares, the Financial Services Authority said today in a statement on its website. The previous FSA rules only applied to the largest lenders operating in the country. Regulators worldwide have been scrutinizing executive compensation after it was blamed for excessive risk-taking that contributed to the worst financial crisis since World War II. European Union governments agreed on June 30 that directors of banks who received public money will be forced to justify their bonuses and lenders will have to report the number of people earning more than 1 million euros ($1.3 million) to regulators. âThe FSA is implementing what has already been decided at European level,â said Nicholas Stretch, a tax lawyer at London- based law firm CMS Cameron. âMarket participants will be disappointed to detect enthusiasm on the part of the FSA to implement changes with such vigor and in such detail.â In the U.K. the cash position of a company determines whether it must comply with the FSA remuneration code. The code applies to banks and building societies with total capital resources of 1 billion pounds and investment firms with resources of 750 million pounds. EU governments blocked plans by some EU lawmakers to limit bankersâ bonuses to half their total pay during talks to set tougher capital and remuneration rules for lenders. The FSA today invited comment on the proposals contained in CP10/19: Revising the Remuneration Code by Oct. 8. The rules come into being at the start of 2011. http://noir.bloomberg.com/apps/news?pid=20601087&sid=aHxKEGH.Pulc&pos=5 I think the United Kingdom is very eager to lose its No.1 spot as a financial center. No problem, Dubai, Hong Kong, Shanghi calling...