The presidential commission that investigated October's stock market collapse urged yesterday that a single agency be put in charge of overseeing the stock and futures markets, with the power to employ "circuit-breaker" mechanisms to prevent another such drop.

If adopted, the regulatory changes would be the furthest-reaching in more than 50 years.

But the Brady Commission report said it was unlikely the October market collapse was a prelude to an economic depression like the one that followed the 1929 stock market crash.

Members of Congress and political analysts said there was little chance the report would lead to major legislation in this election year because of disagreement over proposed reforms. {Details on Page C1.}

The White House distanced itself from the Brady report, saying President Reagan would offer no immediate Wall Street reforms or policy recommendations.

"I intend to carefully review this report along with the New York Stock Exchange and the Chicago Mercantile Exchange studies and the forthcoming studies by the Securities and Exchange Commission and the Commodity Futures Trading Commission," Reagan said. "After that I will decide what actions are warranted."

Dillon Read investment banker Nicholas F. Brady, who directed the study, said the key conclusion was that even though stocks, stock options and futures are traded on separate exchanges in many cities, their activities have become so linked they should be seen as "one market."

Brady said separate regulation of these markets by the SEC and the CFTC is no longer appropriate.

Brady's proposal to centralize regulation on key issues in one agency -- most likely the Federal Reserve Board -- could strip authority on critical matters from the SEC, the CFTC and various exchanges.

The study proposes that the SEC and CFTC continue to regulate the stock and futures markets, respectively, but that on matters including trading halts and minimum financial standards for investors (margins), a single agency such as the Fed be put in charge.

The Fed would have the power to employ "circuit-breaker" mechanisms such as price limits or coordinated trading halts to suspend trading in stock and futures markets.

Sources said the Fed, which has responsibility for regulating the nation's banking system, is not interested in expanding its authority over the financial markets. Sources said Fed Chairman Alan Greenspan and other top Fed officials are worried that such a responsibility would attract congressional scrutiny that could endanger the Fed's independence in setting policy on interest rates and the money supply.

The Brady Commission concluded that Oct. 19th's record 508-point drop in the Dow Jones industrial average was "triggered" by two specific events: "an unexpectedly high merchandise trade deficit which pushed interest rates to new high levels and proposed tax legislation which led to the collapse of the stocks of a number of takeover candidates."

The report said that the initial decline caused by these factors "ignited" heavy selling by two groups: large, institutional investors employing sophisticated portfolio insurance strategies that involved the sale of stock index futures, and mutual funds that needed to raise cash to meet redemption requests from individual investors.

Heavy selling by these two groups, and the prospect of more selling by them, prompted aggressive trading-oriented institutional investors to sell shares in anticipation of further market declines, the report said. At that point, the stock market was a snowball rolling down a hill. Brady said a small number of institutional investors were responsible for enormous trading volume during this period.

According to the report, selling by the aggressive trading-oriented investors depressed the market and stimulated further "reactive" selling by the portfolio insurers and the mutual funds. The market was then caught in a downward spiral that stopped only when the trading day ended.

While congressional reaction to the Brady report was favorable, particularly on its conclusion that regulation needs to be unified, most key legislators stopped short of supporting any specific policy recommendations.

"We think it is a good report. We look forward to hearing Mr. Brady testify in greater detail," said Kenneth McLean, the top aide to Senate Banking Committee Chairman William Proxmire (D.-Wis.).

"The work done is carefully done and well done," said Rep. John Dingell (D.-Mich.), chairman of the House Energy and Commerce Committee. But Dingell called the notion of having the Fed oversee the SEC and CFTC "regrettable."

"It is clear we have too many cooks in the kitchen; having two {SEC and CFTC} and finding two too many hardly screams for introduction of a third," Dingell said.

The Brady Commission report is deliberately vague and loosely worded in many respects, which Brady attributed to time constraints the panel faced.

For example, the report states that "circuit breaker mechanisms {such as price limits and coordinated trading halts} should be formulated and implemented to protect the market system."

But the study does not state whether daily limits on price movements, like the temporary limits imposed by the Chicago Mercantile Exchange on stock index futures contracts, should be placed on stocks. Nor does it suggest how broad or narrow such limits should be if they were to be adopted. It also does not state whether trading halts, such as those used by the New York Stock Exchange when there is a massive imbalance in buy and sell orders for a particular stock, should be adopted in the futures markets.

At a White House news conference, Brady was barraged with questions about the price limits proposal, which had been widely reported in the days preceding the report's release. Brady said the report intentionally does not concern itself with implementation of "circuit breaker" mechanisms -- including trading halts and price limits -- that could shut the markets in the event of dramatic price swings. But he said the "circuit breaker" mechanisms he envisioned would not have halted trading yesterday, when the Dow Jones industrial average plummeted 140.59 points, its third biggest daily drop ever.

Under the current regulatory structure, only the president and the individual stock and futures exchanges have clear authority to halt trading. One of the problems last October, Brady said, was that no single regulatory body had authority to halt trading in all markets.

Brady said a single regulatory body, such as the Fed, could halt trading everywhere through a coordinated policy that involved the use of trading halts for stocks and price limits for stock index futures.

Both mechanisms would be designed to prevent the sort of free fall in stock prices that characterized the 508-point drop in the Dow Jones industrial average on Oct. 19. Stock index futures give investors the opportunity to bet on the future movement of broad stock market averages, such as the Standard & Poor's 500.

Brady said he would favor a coordinated system that applied halts to stocks and price limits to futures, and that could lead to simultaneous suspensions in trading. But he did not rule out the possibility that regulation could be coordinated through the use of daily price fluctuation limits in both markets, halting trading in a financial panic.

Another key conclusion in the Brady report was that margins, the minimum amount of cash required to buy futures or stocks, needed to be made "consistent" and be set by a single regulatory body, most likely the Fed. Currently, the Fed sets margin requirements for stocks and the individual exchanges, such as the Chicago Mercantile Exchanges, set margins for futures. Brady said the futures margins need to be raised. The Merc vehemently would oppose any attempt to strip its margin-setting authority.

The Brady report concluded that the broader economic effects of the October stock market collapse were unclear. Nevertheless, the report also concluded that a depression in the 1990s such as the one following the 1929 market crash was unlikely.

"Two important points emerge from a comparison of the market decline of 1929 to that of 1987," the report said. "First, structural change in the economy since the Depression -- chiefly the changing composition of economic activity, the increasing role of government and the absence of chronic deflation {falling prices} -- means that the economy now appears to be far more stable than it was in 1929.

"Second, the Great Depression appears to have been caused not by the stock market crash but by the interaction of a number of diverse circumstances (such as the declines in agriculture and housing) and misguided policies (such as the Smoot-Hawley tariff, the tight monetary policy in late 1931 and the tax increase in the summer of 1932).

"Thus, as long as a similar set of circumstances and policy initiatives are avoided, a comparable economic contraction should remain only a remote possibility."

Staff writers John M. Berry and Paul Blustein contributed to this report.