The SEC today make permanent the emergency rule put in at the height of last fall's market turmoil to reduce the abusive short-selling. The emergency rule targeting the so-called 'naked' short-selling expired last Friday. In 'naked' short-selling, the sellers do not borrow the shares before selling them but to cover positions sometime after the sale. The rule requires that brokers must promptly buy or borrow securities to deliver on a short sale.



In addition to making the 'naked' short-selling rule permanent, the SEC is working with major stock exchanges to make data on short-sale transactions and volumes publicly available through the exchanges' Web sites.

The SEC said it will hold a public hearing on Sept. 30 to address stock lending for short-selling and possible new disclosures related to short-selling that could be required.

At the same time, the SEC has been considering several new approaches to reining in rushes of regular short-selling that also can cause dramatic plunges in stock prices.

The five SEC commissioners voted in April to put forward for public comment five alternative short-selling plans. One option is restoring a Depression-era rule that prohibits short sellers from making their trades until a stock ticks at least one penny above its previous trading price. The goal of the so-called uptick rule is to prevent selling sprees that feed upon themselves -- actions that battered the stocks of banks and other companies over the last year.

Another approach would ban short-selling for the rest of the trading session in a stock that declines by 10 percent or more.