WASHINGTON -- House and Senate securities lawmakers have agreed on legislation to stiffen federal regulations for dealers in the government securities market in a compromise that largely adopts the tougher approach taken in the House-passed bill.

The agreement came in negotiations over the weekend between members of the securities subcommittees of the Senate Banking Committee and the House Energy and Commerce Committee, congressional sources said yesterday.

The deal reconciles a government securities bill passed by the House Oct. 5 with a less sweeping measure that cleared the Senate earlier in the year.

Backers of the legislation were rushing yesterday to win Senate approval and then send the bill to the House for a final vote before Congress adjourns today. President Clinton is expected to sign the bill if he gets it.

"If the final bill is approved in the form we expect, it takes a measured approach to regulation without damaging the marketplace," said Micah Green, executive vice president of the Public Securities Association.

Enactment of the legislation would end a long struggle by Congress and federal regulators to renew the Treasury's lapsed rulemaking authority over the government market while putting in place additional measures aimed at protecting investors. The Treasury's ability to write new rules for government dealers expired on Oct. 1, 1991.

The final version of the bill would give the Treasury permanent rulemaking authority while granting new powers to the Securities and Exchange Commission in record keeping and several other areas.

This is the approach consistently taken by the House, with the support of the Treasury and the SEC. Senate conferees initially resisted, but sources said House members helped clinch a deal by dropping their support for provisions in a separate securities bill involving limited partnerships.

House members also agreed to remove a provision from the government securities bill that would have allowed regulators to place dealers under mandatory internal control policies to prevent fraudulent sales. That idea was dropped because other parts of the legislation were thought to address the same problem, one source said.

In exchange for the House concessions, the Senate dropped its insistence on giving the Treasury a veto over any sales practice rules adopted by federal regulators. Under the final bill, sales practice rules would be set by the National Association of Securities Dealers for government dealers and by bank regulators in the case of bank dealers.

The Senate also agreed not to insist on a Treasury veto of any antifraud rules adopted by the SEC for dealers.

The final bill retains a provision that would allow the Treasury to get reports from dealers and others in the government market when they take a large position in the market. The aim would be to help detect possible market squeezes and other attempts at manipulation.

Sources said that at one point the Senate wanted the reporting rule to be triggered by a dollar threshold equal to 35% of an issue, but lawmakers dropped the idea for more general language directing the Treasury to be cautious when invoking the rule.

The Federal Reserve Board is on record opposing any large positionreporting rule, arguing that it might encumber the market and affect prices. However, the Federal Reserve Bank of New York, which already gets daily reports from the primary dealers about marketplace activity, supports the change.

The legislation retains a House-passed provision requiring government dealers to keep electronic records of trades for use by the SEC during any inquiries or investigations.

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