Wall Street's biggest firms are close to agreeing on a plan thatwould safeguard the financial markets from the crippling fire salesthat engulfed Lehman Brothers Holdings Inc. and Bear StearnsCos.

By doing so, the participants seek to reach a solution to whatthe Federal Reserve sees as the last systemic risk in the $1.6trillion-a-day market for short-term funding yet to be addressed:The potential for questions over a bond dealer's liquidity tounleash a wholesale dumping of assets that causes a crisis ofconfidence in the financial system.

Prodded by the Fed, industry groups with the support of dealers,banks, and investors are coalescing around proposals to guaranteethe most-liquid types of collateral used to borrow money inrepurchase agreements, or repos, said five people with knowledge ofthe talks. Guidelines to ensure investors who accept riskier assetscan price, hold, or sell the collateral if a dealer defaults arealso being discussed, they said.