Fundamental Brokers Inc. was on the brink of going out of business yesterday as an attempt to sell the firm faltered, according to market sources.

Fundamental, an interdealer broker of Treasury securities, posted a notice on its screens yesterday morning that it had "temporarily suspended" its brokering operations while "negotiations" continued.

Later in the day, Government Securities Clearance Corp. issued a notice that Fundamental had fallen below Government Securities' minimum capital standards for its members.

"FBI has ceased, for a temporary period commencing today, engaging in new trading activity," said the notice, which was signed by Charles A. Moran, Government Securities' president

Government Securities said it would guarantee all trades between Fundamental and its other members that occurred on or before Friday.

Officials at Fundamental did not return calls yesterday

MMAR Inc., Fundamental's owner, said it would not comment.

Treasury traders who dealt with Fundamental said the firm had been troubled for a while, and they speculated it had closed its doors for good.

Traders and market sources said MMAR had been on the brink of selling the firm to Tullett & Tokyo, which brokers foreign exchange transactions.

The deal with Tullett ran into problems on Friday, and subsequently, MMAR withdrew $2 million from fundamental, leaving Fundamental with insufficient capital to comply with regulations, sources said.

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