* EU representatives hope for MiFID deal on Tuesday
* Some elements already agreed eg limits on "dark pools"
* Restrictions on high-frequency trading also agreed
* Reform would also impost position limits in commods mkts
* Competition in clearing remains contentious
LONDON, Jan 14 (Reuters) - Curbs on commodity speculation and ultra-fast share trading would be introduced across the European Union (EU) if a broad reform of securities markets is agreed later on Tuesday.
The measures aim to plug gaps highlighted by the 2007-09 financial crisis, imposing tighter controls on the financial markets and catching up with advances in trading technology.
Representatives of member states and the European Parliament meet in Strasbourg in a bid to reach a final deal on updating the EU's markets in financial instruments (MiFID) law.
"The hope is for an agreement this evening on the whole package," a parliamentary source said.
Banking and other financial industry officials expect a deal, saying time is running out as lawmakers turn their attention to European Parliament elections in May.
Several elements of the package have already been agreed, such as slapping limits on how much share trading can take place anonymously in so-called "dark pools", away from public exchanges such as the London Stock Exchange (LSE).
New restrictions on high-frequency trading (HFT), when a dealer darts in and out of markets in a split second to exploit tiny differences in prices, have also been agreed.
HFT was blamed for exacerbating a plunge in shares on Wall Street in May 2010, known as the "flash crash". A U.S. report last month noted HFT posed potential financial stability risks that meant closer monitoring may be warranted.
The updated EU law will also usher in a new breed of trading platform, known as an organised trading facility or OTF, for trading contracts from the $640 trillion over-the-counter (OTC) derivatives market to improve transparency and record keeping.
HARD TO SPOT
Currently the OTC sector, which covers credit default swaps and interest rate swaps, is mainly traded bilaterally between 15 top banks, but regulators say the sector's opacity made it harder for them to spot vulnerabilities during the crisis.
The OTF is the result of pledges world leaders made in 2009 to shine a light on all parts of the financial market and the United States has already begun authorising its equivalent, known as a swaps execution facility or SEF.
The revision of MiFID will also bring in tighter supervision of commodity markets, by imposing curbs known as position limits to stop any one trader holding too much sway in the market.
Policymakers have insisted on such curbs to stop speculation pushing up food and energy prices.
Some long-standing contentious issues remain, however, pitting the bloc's biggest countries against each other. Key among them is opening up trading to more competition.
The draft revision would allow a clearing house, which stands between two sides of a trade to ensure its completion even if one side goes bust, to clear trades from any exchange.
For example, LCH.Clearnet, majority owned by the LSE, would be allowed to clear trades executed on arch-rival Deutsche Boerse, though Germany and others argue this could fragment trading volumes.
A deal might include a two- to three-year transition period for open-access provision for exchange-traded derivatives, a paper prepared by the EU Greek presidency said.
Another issue is whether physically settled derivatives on commodities such as crude oil, coal, gas and electricity should be subject to MiFID rules such as position limits.
Britain wants some exempted, but may have to give ground if it is to get more of what it wants on competition in clearing.