Levitt says derivatives standards will be 'responsive' not 'burdensome.'

WASHINGTON -- The SEC is working with securities finns to develop an "oversight framework" for unregulated derivatives affiliates that is "responsive to the public interest" but not "unduly burdensome," SEC chairman Arthur Levitt told Rep. John Dingell yesterday.

Levitt, who was responding to a letter from Dingell, said that the Securities and Exchange Commission is prepared to seek derivatives legislation if it is necessary. But for now, he said, the commission is working with a high-level industry policy group to develop voluntary risk management, reporting, and capital standards.

Dingell, the Michigan Democrat who chairs the House Energy and Commerce Committee, has asked Levitt and securities firm officials to recommend an oversight framework for the affiliates by Nov. 1.

Gerald Corrigan and John Heimann are co-chairs of the newly formed group that is working with the SEC. Corrigan, former president of the Federal Reserve Bank of New York, is now at Goldman, Sachs & Co. John Heimann is chairman of global financial institutions at Menill Lynch & Co.

The group, which held its first official meeting about two weeks ago, replaces a Securities Industry Association committee in the discussions with the SEC, sources said.

Other group members are: David H. Komansky, executive vice president of the debt and equity .markets group at Merrill Lynch; Jon Corzine, a partner at Goldman Sachs; Christopher Goekjian, with CS First Boston in London; Peter Karches, a managing director at Morgan Stanley & Co.; John Macfarlane 3d, a managing director and treasurer at Salomon Brothers Inc.; and Thomas Russo, a managing director at Lehman Brothers.

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