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By Huw Jones

LONDON, Feb 28 (Reuters) - The European Union's deal this month on rules to end the bloc's "over-reliance" on London for clearing derivatives is "light" on big banks, but just a first step if they do not shift enough business, EU financial services chief Mairead McGuinness said on Wednesday.

The bulk of clearing in euro-denominated interest rate swaps (IRS), widely used by companies to hedge against unexpected moves in borrowing costs, is done by the London Stock Exchange Group. U.S. exchange operator ICE in London clears large amounts of Euribor futures.

Brussels wants EU regulators to have direct oversight of euro clearing by banks and asset managers based in the bloc, particularly since Britain's departure from the EU in 2020 and requirement to comply with EU rules.

"The final agreement is not as ambitious as I would have hoped. It's complex, it has as a lot of exemptions, and it's relatively light for the largest market participants," McGuinness told a conference held by Deutsche Boerse Group in Frankfurt.

"This is not the end, but rather the first steps of addressing our concerns, so I ask the industry to continue to pay attention to this issue and to actively reduce exposures to CCPs (clearing houses) outside the EU," she said.

Big EU banks lobbied heavily to water down the rules, warning they would be at competitive disadvantage to global peers if cut off from London's deep pools of clearing liquidity and forced to shift business to Deutsche Boerse, Madrid or Stockholm.

The EU's "over-dependence" on London for clearing derivatives presented risks to the bloc's financial stability, and the deal agreed between EU states and the European Parliament gave "no guarantee of a significant decrease of risks very soon," McGuinness said.

EU securities watchdog ESMA will review the rules within about 18 months and could recommend specific clearing volume targets for EU market participants, she said.

"I repeat, if we are serious about the capital markets union and open strategic autonomy, we will need to build on this agreement," she said.

McGuinness' term ends when a new commission takes office in the autumn, but her successor will have to decide whether to extend permission for UK clearers to continue serving EU customers after June 2025.

A London-based industry official said the deal was "very pragmatic", and given improving political relations between Britain and the EU, the sector was not concerned about a "cliff edge" or abrupt cut-off mid-2025.

(Reporting by Huw Jones; Editing by Alison Williams and Tomasz Janowski)