Sen. Walter (Dee) Huddleston (D.Ky. )plans to propose legislation ex-exmptin the $50 million-a-year dealer option market from a broad commodity options trading suspension expected to be approved by the Commodity Futures Trading Commission at its meeting today.

Sources said Huddleston and his staff revealed the exemption proposal to commodity industry executives at a private briefing in New York Monday night.

At his speech before a joint meeting of the Futures Industry Association and Port Authority of New York and New Jersey, the senator reportedly explained the suspension as a "temporary moratorium" on London option sales and U.S. exchange trading of options contracts.

He omitted public mention of the growing dealer option sector, which is dominated by Mocatta Metals Corp. of New York City. Mocatta writes options on gold and silver inventories it maintains for its commercial metals business, and sells the options to brokerages, including Shearson Hayden Stone and Conti Commodities, which retail them to the public.

Pressure to exempt established, highly capitalized firms from the CFTC suspension has been growing in recent months. Firms such as Mocatta have argued that they have no history of sales or trading abuses and should not be included in a ban aimed at curbing widespread fraud in the sale of London commodity options.

CFTC approval of a suspension is expected to trigger the filing of a number of lawsuits by the National Association of Commodity Options Dealers, individual options firms and customers.

At a recent CFTC meeting to discuss the proposed suspension, Chairman William T. Bagley recommended an exemption for dealer options.

In a letter to Bagley dated March 22, Sen. Patrick Leahy (D-Vt.), chairman of the CFTC reauthorization hearings of the Senate Agriculture Committee, noted, "there may be a proposal offered in this committee to exempt" dealer options from any suspension. Leahy asked Bagley why he supports such an exemption.

Bagley's replied on March 30, "Compared with the domestic sales of London options, which have been fraught with fraud, problems with dealer options appear to have been isolated . . ."

The Huddleston exemption reportedly provides for a strict net-worth requirement of $10 million, full disclosure of the markup, cost and other fees of the option, 100 percent segregation of the premiums in escrow accounts, and segregation of profits as they accrue on the contracts. Huddleston aides were unavailable for comment on the proposal yesterday.