Merrill Lynch & Co. said it isn't afraid of head-to-head competition with anybody, but Congress should not rush into reform of the Glass-Steagall Act separating commercial and investment banking.

Congress should initiate a complete review of the Glass-Steagall Act to ensure that any legislative changes do not create new risks in the financial system, William A. Schreyer, chairman and chief executive of the securities and financial services firm, told reporters at the firm's annual press lunch Wednesday.Am I trying to stall? on Glass-Steagall reform, Mr. Schreyer asked. Yeah, I'm trying to stall it. I want functional regulation, fair and adequate capital regulations; then we'll go after it.

Mr. Schreyer said it seems logical that the Securities and Exchange

Commission should regulate all securities-related activities.

My only plea is that nothing can be accomplished by the salami technique of giving banks a little more power and thinking that everything will be OK, he said. This isn't the time to do anything in a Band-Aid way.

He said changes should not be made hastily, or in a piecemeal fashion - as would occur, he said, if Congress enacted the pending Proxmire-Garn bill.

It would be a disservice to the public - consumers and business alike - to make fundamental changes in our financial system without benefit of a comprehensive study of potential risks and gains, Mr. Schreyer said. Our capital markets are the strongest in the world. We should not jeopardize their strength through hasty action.

He said the Oct. 19 stock market collapse underscored the need to very carefully study such issues. He noted that a half-dozen thorough and constructive studies of market volatility have been undertaken in as many months and, therefore, it makes sense to have one such study to examine all possible consequences of repealing or modifying Glass-Steagall.

Mr. Schreyer said the time is right for Congress to establish a blue- ribbon commission for this purpose, and that it should defer legislative action until that commission has made its recommendations.

Let's make sure the changes make us more and not less competitive with foreign institutions, the Merrill Lynch chairman said. What's at stake here is not only the ability of U.S. financial service firms to compete effectively with foreign companies, but also the very strength and stability of our nation's financial system in a world economy that has become far more interrelated than it was in the 1930s.

Mr. Schreyer said he is beginning to sense some improvement in investor confidence. He predicted the Dow Jones Industrial Average will rise to the 2300 to 2400 range in the next few months and that any subsequent pullback likely will hold around the 1900 level.