Bill to Toughen Policing of Futures Market OKd : Commodities: Senate sends President measure that gives more clout to trading commission.

WASHINGTON — The Senate has approved legislation to strengthen the policing of the nation’s futures markets.

The House-passed bill, which was among more than a score of measures approved late Thursday as the Senate prepared to adjourn, was sent to President Bush for signing.

Emerging from three years of disputes and compromises, the bill gives more clout to the Commodity Futures Trading Commission, which regulates the futures market.

The legislation increases the commission’s ability to track trades to root out fraud. It bans most dual-trading--the controversial practice of brokers trading for themselves and clients at the same time--and increases penalties for trading violations.

It also strengthens the oversight of stock index futures by giving the Federal Reserve power to see that requirements for upfront money to trade, called margins, are high enough to deter wild speculation.

The legislation, which has been stalled by disputes between the futures and securities industries since 1989, had been mired in a disagreement on language concerning “swaps.” Those are increasingly popular customized contracts that allow investors to hedge against currency and interest rate changes.

Commodities exchanges were eager to share in the swap business, but had not been able to offer them for fear courts would deem them “futures,” ending their current regulation-free status and leaving exchanges open to lawsuits.

The bill solves that problem by allowing the commission to exempt the new products from its regulations.

But congressional sources said Rep. Glenn English (D-Okla.) pushed to strengthen assurances that exchanges could offer swaps on the same terms as private firms. The matter was resolved in a closed meeting of a number of House members.

Swaps were the last main point of contention in the bill.