The Commodity Futures Trading Commission, state securities regulators and the Senate Agriculture Committee want to put Monex International Ltd. out of business -- or at least out of the leverage business.

But Monex and International Precious Metals Corp., the only two companies left in the arcane business of leverage, have found an ally in the House Agriculture Committee. The House panel not only turned down the trading commission's most recent request to kill leverage -- Congress has rejected similar requests twice before -- but also approved a measure that in two years would end a moratorium on new entrants into the leverage business.

The leverage industry permits investors to speculate on the future prices of precious metals without buying or selling futures contracts that are traded on a regulated exchange. Leverage contracts are the only futures products that legally can be traded off the floor of an exchange.

The industry gets its name because a small down payment allows an investor to control a commodity worth several times as much, just as a lever increases an individual's ability to lift objects.

For a small down payment, customers gain the right to control a certain amount of, say, gold for 10 years. On a contract in which the customer agrees to pay $10,000 for a specific quantity of gold, the customer may put $2,000 down and borrow the rest from the leverage firm, using the gold as collateral.

The investor hopes that the price of the gold he controls rises enough above $10,000 to cover the commissions, maintenance charges and interest paid the leverage firm.

CFTC Chairman Susan M. Phillips said there is no justification for continuation of the leverage industry, which the agency finally began to regulate two years ago. She said that she, like the House committee, is uncomfortable with the near-monopoly the agency created when it barred new leverage firms in 1978. But she said that she is more concerned that allowing new firms to enter would invite a massive increase in fraudulent operators that neither the states nor the CFTC are equipped to police.

For a little-known industry that has only two legally active companies and probably no more than 14,000 customers, leverage generates an outsized amount of controversy in the commodity trading field. It also commanded an enormous share of attention during the Senate and the House committees' recent hearings on the regular reauthorization of the Commodity Futures Trading Commission.

Opponents of the leverage industry say it is an aberration, that what it sells is indistinguishable from futures contracts that Congress for decades has declared should be traded on regulated exchanges such as the Chicago Board of Trade or the New York Commodity Exchange.

Furthermore, they say that off-exchange trading is a breeding ground for fraud. The CFTC's Phillips said the mere existence of a handful of legal off-exchange firms spawns illegal look-alikes who do not have the capitalization requirements or the customer-protection rules required of regulated firms.

Many investors can be led to believe that the firms are regulated and, by the time underfunded and understaffed state regulators take action, many people can be bilked.

Proponents say leverage offers smaller investors the same chance to speculate on commodities -- mainly precious metals -- that bigger investors have on futures exchanges.

The typical leverage contract is indistinguishable from the futures contract except in ways that benefit the leverage firm, critics charge. For example, it is the leverage firm that decides the current price of the metal. In a futures contract, the metal's price is determined by open bidding on the exchange floor.

"The only place to sell the gold is back to the people you bought it from, and they are the ones who set the price," according to CFTC Commissioner Kalo Hineman who, like Phillips, is an opponent of the leverage business.

Greg Walker, vice president and general counsel for Monex, said that leverage contracts have evolved from financing purchases of specific bags of silver coins to transactions that today are similar to standard futures contracts.

But Walker said there are differences between leverage and futures contracts. Leverage firms are required to have at least 90 percent of the metal under contract covered by the physical commodity or futures or forward contracts in the metal. The dealer has to have at least 25 percent of the amount under contract in physical inventory.

Furthermore, he said, a customer can pay the total price of the contract and take delivery of the metal at any time. In a futures contract, the customer must wait until a specific delivery date and can take delivery only at a handful of specified warehouses.

Few futures or leverage contracts actually are settled by delivery of the underlying commodity. But Walker said that about half of Monex's customers -- who represent a far smaller fraction of total contracts outstanding -- actually take delivery.

He said Monex has between 10,000 and 12,000 customers and that the company sells about 75,000 leverage contracts a year.

For a long time, leverage firms were the source of an outsized number of customer complaints at the CFTC. Since the commission imposed regulations on the industry two years ago, the level of complaints has dropped. So has the number of firms. The CFTC put one, Premex, out of business because it violated a number of the new customer-protection rules. Another, First National Monetary Corp., no longer is selling leverage contracts and has challenged the CFTC's rules.

Phillips is merely the latest in a series of commodity regulators who have tried to eliminate leverage, which Congress specifically authorized when it created the CFTC in 1974.

In 1978, the four-year-old CFTC, up for its first reauthorization, tried to give back jurisdiction over leverage to the Securities and Exchange Commission, where it had rested until 1974. Instead, Congress ordered the CFTC to write a set of regulations to govern the leverage business and then enforce those regulations.

In 1978, after being prodded by Congress to regulate leverage, the agency barred any new firms from entering the business but did nothing more.

In 1982, the agency said that leverage is no different than futures trading and that leverage contracts should be regulated as futures contracts.

But Congress again ordered the CFTC to regulate leverage and said the commission could not determine that a leverage contract was a futures contract that had to be traded on a futures exchange. Finally, in 1984, the CFTC issued regulations that many think impose stiffer requirements on leverage firms than on other futures industry participants.

House Agriculture Committee member Dan Glickman (D-Kan.), whose attempts to end the leverage industry were defeated in committee, said he believes that too few of his colleagues recognize the regulatory and fraud problems that are likely to ensue if the leverage industry is opened to more participants.

He said that most of his colleagues see the elimination of leverage as doing little more than putting two firms out of business.

Glickman said that the futures exchanges -- powerful lobbying influences -- did not fight hard for the elimination of leverage. Neither of the Chicago exchanges -- the Chicago Mercantile Exchange and the Chicago Board of Trade -- feels much threat from an expanded leverage industry, although all major exchanges are philosophically opposed to off-exchange futures trading.

Congressional sources said that the Chicago Mercantile Exchange's opposition cooled after the committee voted to restrict leverage to precious metals -- which would eliminate Monex's growing business in foreign currencies and remove any threat to the Mercantile Exchange's foreign currency futures CFTC Commissioner Kalo Hineman who, like Phillips, is an opponent of the leverage business.

Greg Walker, vice president and general counsel for Monex, said that leverage contracts have evolved from financing purchases of specific bags of silver coins to transactions that today are similar to standard futures contracts.

But Walker said there are differences between leverage and futures contracts. Leverage firms are required to have at least 90 percent of the metal under contract covered by the physical commodity or futures or forward contracts in the metal. The dealer has to have at least 25 percent of the amount under contract in physical inventory.

Furthermore, he said, a customer can pay the total price of the contract and take delivery of the metal at any time. In a futures contract, the customer must wait until a specific delivery date and can take delivery only at a handful of specified warehouses.

Few futures or leverage contracts actually are settled by delivery of the underlying commodity. But Walker said that about half of Monex's customers -- who represent a far smaller fraction of total contracts outstanding -- actually take delivery.

He said Monex has between 10,000 and 12,000 customers and that the company sells about 75,000 leverage contracts a year.

For a long time, leverage firms were the source of an outsized number of customer complaints at the CFTC. Since the commission imposed regulations on the industry two years ago, the level of complaints has dropped. So has the number of firms. The CFTC put one, Premex, out of business because it violated a number of the new customer-protection rules. Another, First National Monetary Corp., no longer is selling leverage contracts and has challenged the CFTC's rules.

Phillips is merely the latest in a series of commodity regulators who have tried to eliminate leverage, which Congress specifically authorized when it created the CFTC in 1974.

In 1978, the four-year-old CFTC, up for its first reauthorization, tried to give back jurisdiction over leverage to the Securities and Exchange Commission, where it had rested until 1974. Instead, Congress ordered the CFTC to write a set of regulations to govern the leverage business and then enforce those regulations.

In 1978, after being prodded by Congress to regulate leverage, the agency barred any new firms from entering the business but did nothing more.

In 1982, the agency said that leverage is no different than futures trading and that leverage contracts should be regulated as futures contracts.

But Congress again ordered the CFTC to regulate leverage and said the commission could not determine that a leverage contract was a futures contract that had to be traded on a futures exchange. Finally, in 1984, the CFTC issued regulations that many think impose stiffer requirements on leverage firms than on other futures industry participants.

House Agriculture Committee member Dan Glickman (D-Kan.), whose attempts to end the leverage industry were defeated in committee, said he believes that too few of his colleagues recognize the regulatory and fraud problems that are likely to ensue if the leverage industry is opened to more participants.

He said that most of his colleagues see the elimination of leverage as doing little more than putting two firms out of business.

Glickman said that the futures exchanges -- powerful lobbying influences -- did not fight hard for the elimination of leverage. Neither of the Chicago exchanges -- the Chicago Mercantile Exchange and the Chicago Board of Trade -- feels much threat from an expanded leverage industry, although all major exchanges are philosophically opposed to off-exchange futures trading.

Congressional sources said that the Chicago Mercantile Exchange's opposition cooled after the committee voted to restrict leverage to precious metals -- which would eliminate Monex's growing business in foreign currencies and remove any threat to the Mercantile Exchange's foreign currency futures trading.

Rep. Ed Jones (D-Tenn.), chairman of the subcommittee on conservation, credit and rural development, wrote his colleagues that leverage presents an investment alternative and that for 12 years Congress has considered leverage to be different from futures.

"To ban them by calling them futures now, for reasons of either agency convenience or a sudden interest in regulatory purity by the largest futures exchanges, would be fundamentally inconsistent with congressional intent," Jones wrote. He said the two leverage firms employ 400 persons and have many customers.

"We would never seriously consider action which would so disrupt the lives of 400 farm families, or destroy an agribusiness serving so many customers," Jones said.