Wall Street derivatives players who are upset by a recent questionnaire from the General Accounting Office asking for sensitive business information may get a reprieve.

In recent meetings with derivatives players, the GAO has shown a willingness to address the industry's concerns about confidentiality and scope, conceding it may limit and alter the nature of its inquiries.

The survey is part of the GAO's response to a 1992 request by Rep. Edward Markey, chairman of the House Energy and Commerce Committee, for a study of the derivatives market.

Last Thursday, industry officials met with GAO officials including Charles Bowsher, the comptroller general of the United States and the head of the GAO. The officials told the GAO that they had serious problems with the questionnaire in its current form.

Several Wall Street officials said they grew somewhat alarmed after reading early versions of the GAO study and portions of a GAO report to the Clinton transition team about the use of derivatives. They said the tone of the early drafts indicated a lack of understanding among federal officials of the derivatives market. But they said the GAO seemed to be moving up the learning curve rapidly.

"I suspect that the [early draft] was nothing but a first stab," an official who said he had seen the draft said. The draft contained critical language and said unregulated derivatives could lead to the collapse of the financial system, the official said.

"But from our subsequent contact with them, I'd say they are learning fast, and I think they will be toning it down quite a bit," he said.

The questionnaires followed onsite visits by GAO officials, some including Comptroller Bowsher, to at least six Wall Street firms and one accounting firm in the past six months.

Several sources contacted by the GAO said agency officials told them they hoped to release their study by the end of September.

Wall Street officials at the firms involved were hesitant to discuss the GAO meetings and spoke only on the condition of anonymity.

According to sources in Washington who do not work at any of the firms, Bowsher participated in meetings with officials from Merrill Lynch & Co., J.P. Morgan Securities Inc., Bankers Trust Co., and Arthur Andersen & Co. Officials at those firms declined to confirm or deny any contact with the GAO.

One official who participated in a meeting with Bowsher and other GAO officials came away impressed. "He asked smart questions and seemed to have an open mind. I left with a good feeling," the official said.

Another official said Bowsher had a broad agenda when he called on firms. In addition to holding discussions related to the derivatives study, Bowsher also inquired about unrelated matters, the official said.

A spokesman for the GAO declined to comment on the study or any meetings. But the spokesman confirmed that Bowsher has gone to speak with officials at firms in connection with several on-site visits.

At last Thursday's meeting, GAO officials were receptive to the industry's concerns, according to sources familiar with the meeting.

But no definitive agreement was reached, and both sides expect to continue the dialogue in the next few weeks.

One of the most basic concerns on Wall Street is the confidentiality of data surrendered to the GAO. Officials said they were worried that proprietary data given to the GAO could be given out to Congress or others in a form that would not adequately protect their trade secrets.

Industry officials proposed that Arthur Andersen act as a go-between for the data-gathering effort, sources said. The accounting firm compiles data on derivatives activity for surveys by the International Swap Dealers Association, although the data in such surveys is considerably less detailed than the data requested by the GAO.

Arthur Andersen could compile data submitted by a number of firms and provide it to the GAO in different forms, sources familiar with the proposal said. Data could be provided in summary form, as "industry-wide" totals or averages, or simply without identifying which firm submitted which answers, the sources said.

Industry officials who have raised concerns about confidentiality in the last month had mixed reactions to the possible role of Arthur Andersen. Some said they would be reassured by Arthur Andersen's involvement, while others remained skeptical.

"We really aren't comfortable telling anyone exact profit levels of different departments in such detail, and, frankly, I can't see how much of that information would be at all useful," one industry official said.

The questionnaire, part of the GAO's data-gathering effort for its year-long study of the derivatives market, asks for detailed information about firms' swaps departments and risk evaluation systems.

Derivatives officials said that somewhat similar types of information had also been requested by other government agencies preparing studies of the derivatives market. The officials said prior formal and informal requests had come from the Securities and Exchange Commission and the Commodities Futures Trading Commission.

But the GAO questionnaire also asked for firms' exact holding of futures and equity products, and for information on revenues and profitablilty in many different business lines, officials who received the survey said.

The original questionnaire uses a broad definition of derivatives that encompasses activities in many markets, including the mortgage-backed securities markets and futures markets, sources who received the questionnaire said.

Several sources familiar with Thursday's meeting said they believed the GAO would now tailor its information requests to focus mostly on the swaps market and less on other areas.

The original questionnaires were not uniformly sent to derivatives departments on Wall Street. Officials at firms that received the questionnaires said the requests went either to their government relations offices, top-level management, or their derivatives departments.

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