SEC set to unveil emergency trading rules
Thursday September 13, 6:32 pm Eastern Time
(UPDATE: adds Oxley, Pitt comments)
biz.yahoo.com
By Kevin Drawbaugh
WASHINGTON, Sept 13 (Reuters) - Financial regulators on Friday plan to unveil a raft of special trading rules -- some not used in more than a decade -- to apply to U.S. stock markets when they reopen next week, officials said Thursday.
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Among the emergency measures will be relaxed limits on corporate share repurchases, said U.S. Securities and Exchange Commission Chairman Harvey Pitt at a news conference.
``We are going to announce tomorrow ... steps that we will be taking to facilitate an orderly market. One of the things I'll tell you now is that we intend to make it easy for public corporations to make a decision to repurchase their shares. But we will retain any restrictions that we think have an impact on public investors,'' he said.
``As to other steps, while there are a number that we have already decided upon, I think it's a little premature to tell you all of them,'' said Pitt, the top U.S. markets watchdog.
Regulators have an array of policy options at hand that could help alleviate worries among some analysts and traders about liquidity and volatility when trading resumes, which will be on Monday morning, exchange officials have announced.
Beyond easing corporate share repurchase rules, regulators may be eyeing adjustments in margin requirements and clamping down on existing short-selling restrictions, said securities industry spokesmen, lawyers and academics.
``With respect to short selling,'' Pitt said, ``the goal of all of us is to have a market that most closely approximates the normal trading environment. As a result of that, you can tell in which direction we will probably be leaning.''
STABILIZING MEASURES WELCOMED BY INDUSTRY
Any short-term measures to help ensure efficiency and stability are welcome, market participants and observers said.
``The private securities bar would generally look favorably upon these types of steps, under these extraordinary circumstances, to ensure some stability in the securities markets. These are the right steps to take,'' said Frank Goldstein, a lawyer at the firm of Sidley Austin Brown & Wood.
U.S. financial markets closed on Tuesday after two hijacked jetliners slammed into and destroyed the World Trade Center in New York City, devastating the financial capital of the world.
Government bond markets resumed trading smoothly on Thursday, but the stock markets remained shut. Officials said they would reopen on Monday.
``The whole focus in reopening the markets is to ensure that there is a maximum amount of liquidity and that they are orderly ... So measures to enhance liquidity and stability in the marketplace are welcome,'' said Jim Spellman, a spokesman for the Securities Industry Association.
House Financial Services Committee Chairman Rep. Michael Oxley Thursday met with SEC, Treasury Department and Federal Reserve officials.
``The SEC will be announcing tomorrow ... clear guidelines that will hopefully reassure the markets,'' including a buyback measure, said the Ohio Republican.
Under SEC law, corporations are restricted from buying back their own shares under certain circumstances. Buybacks are disallowed at the market open and near the close. Other limits on price, participants and volume percentages restrict share repurchases, as well.
These restrictions were relaxed after the market crash of October 1987 and were effective, said Ed Fleischman, an SEC commissioner from 1986 to 1992 who is now in private practice at the law firm of Linklaters in New York.
``At the time, it was done fairly deftly. In fact, the companies did provide some measure of buy side ... That in itself was a tonic to the market,'' Fleischman said. |
