The Independent Commission on Banking (ICB) was appointed three months ago by the British government to assess the structure of the industry in the wake of the financial crisis, which saw taxpayers bailout leading financial groups.
The ICB published its first issues paper on the topic on Friday as its work gets underway.
It said it would look at separating companies' retail and investment banking divisions and imposing limits on proprietary trading and investing, along with looking at boosting competition and market infrastructure reform.
"The list is not intended to be exhaustive and ... the commission has not moved toward any particular options at this stage," it said in a statement.
Despite much strong rhetoric from politicians in recent weeks against investment bankers, many industry members and analysts have said that it is unlikely that British banks will ultimately be forced to break up.
Most universal banks proved stronger than many "narrow lenders" with less diversified business models during the crisis, and a full break-up could also prompt leading companies to shift overseas, analysts say.
Earlier this week, UK Business Secretary Vince Cable said a further taxation on banks was possible but HSBC, Barclays and Standard Chartered have all warned they could leave Britain if the regulatory environment gets tougher.
The commission has until the end of 2011 to report.
