BOSTON -- Rep. Edward Markey, D-Mass., said the National Association of Securities Dealers' rules on sales practices for derivatives have "serious deficiencies" and need to be toughened to include more oversight of securities dealers.

Rep. Markey, speaking at municipal bond conference here, said banks are already regulated by existing banking law but securities dealers escape much of the needed oversight. The loopholes allow unscrupulous dealers to take advantage of unsophisticated state and local finance officials, he said.

The congressman said some derivatives, such as futures and options, are already closely monitored by the government and "very little if any additional regulation is need." Other types of derivatives need much more regulation, he said.

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