NEW YORK (CNN/Money) - Merrill Lynch will have more time to talk to New York Attorney General Eliot Spitzer about a possible settlement of allegations of analyst conflicts of interest before having to appear in court.

Merrill said Tuesday it has agreed with Spitzer to move the New York State Supreme Court date for scheduling testimony and producing documents to May 16 from this Thursday, May 9.

The move is due to what both sides called "productive discussions." Merrill was expected to make a new settlement offer soon, according to sources, but the extension will give the parties more time for discussion.

All of Wall Street is waiting for a possible settlement, which is expected to be a model Spitzer will use for other brokerages he is investigating.

Meanwhile in Washington, officials at the Securities and Exchange Commission are preparing to vote Wednesday morning on proposed rule changes from market regulators designed to combat possible conflicts of interest between equity research and investment banking at brokerage firms.

The SEC will consider new rule proposals from the National Association of Securities Dealers and the New York Stock Exchange.

The NASD and NYSE came up with a set of proposed rule changes for analysts in February and submitted them to the SEC in March. The SEC has since revised and updated those rules based on comments from various sources, including the brokerages themselves.

The issue of analyst conflict of interest has heated up ever since Spitzer released e-mails in April showing Merrill analysts privately disparaging stocks that publicly received high ratings. The attorney general said the evidence indicated the analysts were influenced by Merrill's banking relationships with companies the firm covered.

Spitzer obtained a court order demanding more disclosure from Merrill (MER: down $0.21 to $40.80, Research, Estimates) about its banking relationships and is currently negotiating with the firm for more concessions.

On April 25, the SEC launched a formal investigation into conflicts of interest between research and banking, which SEC Chairman Harvey Pitt called "the next step" in a year-long review of analyst practices.

On Wednesday, three SEC Commissioners will vote on the set of proposed rules

The changes include a prohibition against analysts offering or threatening to withhold a favorable research rating or specific price target to gain investment banking business.

On research reports firms would be required to clearly define their stock ratings, disclose the percentage of stocks receiving a "buy," "sell," or "hold" rating and include a chart with historical prices of the stock and points where the firm initiated coverage or changed its rating.

Also among the proposed changes is a prohibition against analyst compensation being tied specifically to investment banking transactions.

Wall Street firms have asserted that analysts are not paid for specific deals, but the Wall Street Journal reported Monday several Wall Street employment contracts and accounting firm policies state clear rules for bonuses and compensation related to bringing in new business, including which deals would garner the most extra cash.

SEC Market Regulation Director Annette Nazareth said in a conference call that while a vote is expected on these rules Wednesday, information obtained in the Commission's official investigation may demonstrate the need for more regulations.

"I think what we have here now is a very significant set of rules," Nazareth said. "I think the Commission has made it clear we will act on these rules tomorrow, but these additional inquiries we're doing will help us find out if we need additional actions."

Also in the proposed rules is a stipulation that no research analyst may be supervised or controlled by the investment banking department. In addition they recommend a "quiet period," during which no firm acting as lead manager or co-manager for an initial public offering of a company be allowed to issue a research report on that company for 40 days.

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Changes are also recommended for the personal trading of analysts and their households. The regulators propose that no analysts or members of their household be allowed to make stock trades contrary to the analysts' current recommendations or trade 30 days before a research report is issued.

They also propose rules for further disclosure about the brokerage firm's banking relationships with companies they cover and the financial interest of analysts in companies, similar to those adopted by Merrill.

Nazareth said while brokerages may have already started to reform their research practices, the new rules, if adopted, will mean serious change in the way the firms do business.

"(Brokerages) may have been starting to work on (reform)," she said. "But trust me, from the nature of the comment letters, (the brokerages) are viewing this as a very significant change."

If approved, the changes will be rolled out over the rest of the year.