US crackdown on short selling
Securities regulators in the US have extended an emergency rule aimed at curbing abusive short selling in the stocks of 19 major financial firms, including mortgage giants Freddie Mac and Fannie Mae.
The rules will now be in place until 12 august.
The Securities and Exchange Commission (SEC) introduced the rule in a crackdown on possible market manipulation blamed for declines in the shares of financial companies.
It outlaws "naked" short selling where investors don't borrow a stock before selling it short. They are now required to borrow it and deliver the stock on the settlement date.
SEC chairman Christopher Cox told a congressional hearing the agency would propose a rule extending the emergency requirements to the entire market. at present, it applies only to financial stocks including Lehman Brothers, Goldman Sachs, Merrill Lynch, Morgan Stanley, JPMorgan Chase and Citigroup.
