A group of federal regulators working on ways to prevent another stock market crash appears certain to clash with activist members of Congress who want to do more than the anti-regulation Reagan administration. The group, appointed in mid-March, is chaired by Treasury Under Secretary George D. Gould and includes the heads of the Federal Reserve Board, Securities and Exchange Commission and Commodity Futures Trading Commission. According to two sources familiar with its deliberations, the focus of group's recommendations is likely to be improved communication and cooperation among both exchanges and regulatory agencies rather than jurisdictional changes requiring new legislation. If that is the case, it will not satisfy either Sen. William Proxmire, D-Wis., chairman of the Senate Banking Committee, or Rep. Edward J. Markey, D-Mass., chairman of the finance subcommittee of the House Energy and Commerce Committee. However, one of the sources, who spoke on condition of anonymity, cautioned that the Gould group's positions were still fluid and could change before it reports to President Reagan the week of May 16. And, pressure on the group to recommend more than it apparently had intended increased on two fronts last week. An earlier White House panel, headed by Wall Street investment banker Nicholas F. Brady, issued a statement warning that regulatory turf fights should not be permitted to sidetrack market reform, which it said ``will inevitably require legislation.'' And, according to one of the sources, SEC Chairman David S. Ruder has made it clear he will stake out an independent position if the Gould group's final report does not go far enough. Ruder has urged that his own agency, which regulates the stock markets, be given additional authority over stock index futures, which currently fall under the jurisdiction of the Commodities Futures Trading Commission. At the very least, he wants ``tie-breaking'' authority to resolve disputes during emergencies, such as the record Oct. 19 decline of 508 points in the Dow Jones average. Both CFTC Chairwoman Wendy L. Gramm and Federal Reserve Chairman Alan Greenspan are opposing jurisdictional changes. Proxmire has introduced a bill that would create a three-member committee to coordinate regulation. It would consist of the chairmen of the SEC, CFTC and the Federal Reserve. The Fed chairman would head the committee, but disputes would be resolved by majority vote. Markey's staff is still working on legislation and is unlikely to be finished before the Gould group reports to the president, according to an aide, who asked not to be identified by name. However, Markey has said the SEC, not the CFTC, should regulate stock index futures. The administration working group appears likely to recommend only one of the changes sought by legislators and the Brady panel: brief, coordinated ``circuit breakers'' to break the momentum of a soaring or plunging market, one of the sources said. Agreement on margin levels _ the amount of money required to make an investment in either the stock or futures markets _ was ``still within the realm of possibility'' but less likely because of strong disagreement between Ruder and Gramm, the source said. Futures margins are higher than they were before the Oct. 19 stock market crash, but Ruder has said further increases are needed. Gramm, reflecting the views of the industry her agency regulates, has resisted. The Federal Reserve sets stock and stock option margins, while the individual futures exchanges set their own margins. According to the source, Treasury Department officials also believe ideally that stock and option exchanges ought to set their own margins. However, the Brady panel in its statement last week said margin-setting was too important to leave to the exchanges. It said the Fed is the logical agency to set all equity margins to ensure their harmony with one another. According to Markey's aide, the Massachusetts congressman sides with the Brady panel on that issue and is considering including in any legislation a direction that stocks and futures margins be not just harmonious, but equivalent. That would be controversial. Gramm and executives of the Chicago futures exchanges argue that stock and futures margins serve different purposes and need not be the same. Other tentative provisions of Markey's bill would give the SEC power to impose trading halts and take other action during market emergencies. The legislation also is likely to prohibit cross-market front-running. Some brokerage firms have been accused of profiting in either the stock or futures market by trading for their own accounts in front of a major trade by a big client like a mutual or pension fund in the other market. The Gould group from the start faced criticism from Proxmire and Markey that it was little more than a delaying tactic by the administration, anxious to avoid any additional regulation of the markets. They believe Congress must get moving this spring before its members become preoccupied with the summer political conventions and their own re-election campaigns in the fall. However, the participation of Brady on the side of Proxmire and Markey has made the debate more complicated than a dispute between Democrats and Republicans. Brady, a former Republican senator from New Jersey, is a close adviser to Vice President George Bush and is considered a leading candidate for Treasury secretary should Bush win the presidential election in November. Republican staffers are assisting Democratic aides in drafting House legislation, although it is unclear what parts Republicans will ultimately support, according to the Markey aide. In the Senate, Brady's backing helped Proxmire obtain more Republican co-sponsors than Democratic. Five Republicans and three Democrats have signed on.
