LONDON, June 18 (Reuters) - Merging national stock

exchanges and clearing houses and pan-EU supervision are the

next steps needed to achieve a better capital market for the

bloc, its financial services chief said.

European Union member states should set aside such "national

symbols" and recognise that consolidation is crucial to develop

a single market for capital, said Mairead McGuinness.

Countries have long blocked efforts to centralise

supervision and consolidate market players, but discussion on

this is needed to end fragmentation, she said, adding that the

need was now more pressing as EU financial centres like

Frankfurt and Paris face post-Brexit competition from London.

"Does it really make sense to have numerous trading venues

with very few or even no initial public offerings (IPOs)?"

McGuinness said in a speech at a joint commission and European

Central Bank event in Frankfurt on Tuesday.

"And in the same way, does it make sense to have some twenty

Central Security Depositories when the US has only one?"

The EU's decade old capital markets union (CMU) project has

made some progress but faces opposition on key issues.

These include centralising supervision and streamlining tax

and insolvency rules, with progress on opening up cross-border

markets to retail investors also slow.

The upshot is that a company operating across member states

may have to deal with several different regulators which may

each have different interpretations, McGuinness said.

EU leaders recently backed fresh attempts to fast track CMU

when a new European Commission, which has powers to propose

laws, takes office in the autumn, even to the extent of some

states going it alone.

But tinkering at the edges will not create a CMU that can

fund the huge investments needed, said McGuinness.

"We could start with groups or market infrastructures that

provide services across the whole of the single market. And this

could be through an opt-in regime or joint supervision."

The Commission will consult in the autumn on scaling up the

EU's securitisation market, she said.