The European Union's executive arm is set to present a long-awaited financial market reform meant to defuse risk-taking by the largest banks and protect taxpayers from the potential costs of rescuing them.

Wednesday's EU Commission proposal — echoing the United States' so-called Volcker Rule — is a key part of the 28-nation bloc's efforts to overhaul its financial system to avoid a repeat of the global crisis that forced governments to bail out banks in 2008 and 2009.

The draft regulation is expected to bar the continent's largest banks — those whose collapse would threaten the stability of the financial system — from trading exclusively for their own profit, as opposed to a client's. It will also aim at separating the banks' riskier trading activities from their deposit-taking business.