Merrill Lynch, the US brokerage, may disclose conflicts of interest between its investment bankers and research analysts on a website, as opposed to directly on the firm's research notes.

The idea is one proposal being considered as Merrill and the office of Mr Eliot Spitzer, the New York attorney general, discuss a compromise to a court order handed down last Monday.

The order came after a 10-month investigation by Mr Spitzer's office into conflicts of interest in Wall Street stock research. Merrill won an extension on Thursday until Friday next.

The discussions are an encouraging sign for Merrill that it may be able to find a more palatable way to comply.

The broker's shares have fallen more than 12 per cent since Monday as investors fear client defections and a harsh settlement imposed by Mr Spitzer.

Other Wall Street investment banks are closely following events because Mr Spitzer has subpoenaed them for evidence in the probe and may try to force similar reforms on them.

Mr Spitzer's office plans to meet the Securities and Exchange Commission (SEC) and the National Association of Securities Dealers to discuss the probe early this week.

Mr Spitzer has accused Merrill's internet analysts of compromising their integrity for the sake of the firm's investment banking business. His probe uncovered a series of e-mails in which Merrill's analysts were privately disparaging companies that they were publicly touting for investors.

The court order is a prickly matter for Merrill. The bank already lists in fine print on its research notes whether the companies covered are clients. But having to disclose prospective clients would tip Merrill's hand and put it at a competitive disadvantage to other firms.

It might also create insider trading issues if the disclosure hinted that Merrill was approaching certain companies for new stock offerings or other underwriting work.

The website proposal would be less brazen than printing Merrill's relationships on the covers of its reports.

After the court order is resolved, Merrill is still facing the possibility of a more stringent remedy from Mr Spitzer. He has not ruled out criminal charges.