WASHINGTON - Legislation to strengthen regulation of the government securities market was approved by the House securities subcommittee yesterday amid signs a compromise is being negotiated to overcome disputes that contributed to the bill's death last year.

The legislation, approved on a voice vote by the House Energy and Commerce Committee's telecommunications and finance subcommittee. is exactly the same as the measure introduced in January by Rep. Edward J. Markey, D-Mass., the panel's chairman.

While aides declined to spell out details of the possible compromise, it is believed to be designed in part to settle a conflict between the Treasury and the Securities and Exchange Commission over which agency will have primary authority over government dealers. It is unclear whether it would settle a rift between the House securities panel and the House Banking Committee over whether bank regulators or the SEC should have authority over bank dealers.

"Over the last several weeks. we have been engaged in an intensive round of discussions with Treasury and the Securities and Exchange Commission aimed at determining whether it might be possible to craft a tough government securities reform package that all parties could agree on," said Markey. He sponsored the legislation -- the Government Securities Reform Act of 1993 -- along with six other House members in the wake of the Salomon Brothers auction scandal.

"Treasury undersecretary Frank Newman and his staff have played a constructive role in the process, and in the last few days we have made considerable progress. Unfortunately, we still do not yet have an agreement." said Markey, who declined to spell out any details about the possible compromise. "For this reason, the subcommittee is proceeding with H.R. 618 as originally introduced."

Markey's bill would grant the SEC extensive regulatory authority over broker-dealers in the government market. Currently. the Treasury has primary authority to regulate government securities dealers.

Clinton administration officials have not taken a formal position on the issue, but some in Congress say officials at the, Treasury are likely to resist proposals that would diminish the Treasury's authority over the government bond market.

Markey's bill includes several other tough provisions opposed by bond industry and other critics, including a provision that would give the SEC "back-stop" authority to disseminate price information to investors in the event private sector vendors are found to be inadequate.

That and other tough provisions do not appear in a more modest Senate bill introduced by Sen. Christopher Dodd. D-Conn., chairman of the Senate Banking Committee's subcommittee on securities. The measure, less sweeping than Markey's bill, was unanimously approved by the full Senate Banking Committee in May, but no action has been scheduled by the full Senate.

That legislation would permanently reauthorize the Treasury's rulemaking authority under the Government Securities Act, which lapsed Oct. 1. 1991. Without such authority, the Treasury is unable to adopt any new rules for dealers in the government market, although existing rules remain in place.

A panel aide said after yesterday's vote that while sponsors have not been able to get "everyone to sign on the dotted line," they are "pretty close" to a compromise agreement with the Treasury and the SEC on "several provisions."

A Washington source who asked not to be identified said that some of the changes would relax provisions in the bill, and others would strengthen them. Neither he nor panel aides would provide specifics. The House aide said, however, that "We've been willing to go an extra mile."

One key industry source said, "I understand that [the discussions] deal with all aspects of the bill. It deals with substantive issues as well as jurisdictional issues."

Markey said yesterday that the subcommittee had to act on the bill now so that the full House Energy and Commerce Committee will have time to vote on the measure before Congress' August recess. which is tentatively set for Aug. 9 to Sept. 7.

"Given the possibility that this legislation may be sequentially referred other House Committees, it is important for us to get the ball rolling now," he said.

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