SEC braces for markets' opening bell
© St. Petersburg Times,
WASHINGTON -- The Securities and Exchange Commission used its emergency powers for the first time Friday to ease restrictions on companies buying back their own shares to smooth trading for the anticipated reopening of the stock markets Monday after an extraordinary four-day shutdown.
Under the new rules, the SEC said, corporations may buy back their own shares without meeting customary restrictions regarding the volume of shares and timing of purchases. One major technology company -- Internet networking giant Cisco Systems Inc. -- said late Thursday that it plans to repurchase up to $3-billion of stock during the next two years.
In addition, mutual funds may borrow from and lend to related parties, and accounting firms may provide bookkeeping services to help brokerage firms that lost records in the World Trade Center area without violating rules requiring accountants to be independent of firms they audit.
"These markets are the world's strongest and most vibrant, in spite of the heinous acts of last Tuesday," the SEC said in a brief announcement. "Investors should be assured that U.S. markets will function effectively and fairly, and that market and investor protections are squarely in place."
SEC officials know that restoring confidence in the U.S. financial system means reopening the symbolic trading floors at the New York Stock Exchange, a mere five blocks from the devastated World Trade Center site in lower Manhattan's financial district. At the same time, the regulators and Wall Street officials must strike a balance between the goal of a normally functioning market and the need to respond to a panicky sell-off by investors.
Reopening the market after the longest closure since the Great Depression will be a struggle: Workers have been racing to replace the communications and power systems lost in Tuesday's terrorist attack, but some experts aren't convinced there will be enough time to repair the damage.
The plan to resume trading Monday on the NYSE, the all-electronic Nasdaq Stock Market and the regional U.S. exchanges depends on the results from a test of market systems today. The SEC has set up a telephone hotline to help answer individual investors' questions and address trading-related complaints: (800) 732-0330.
Uneasiness about world affairs and a potential slide in the still-silent New York stock market rippled through global financial exchanges Friday on the second day of limited U.S. trading. Bracing for the worst when stock trading resumes Monday, investors sent the dollar to six-month lows against the euro and yen and pushed bonds higher again.
Share prices tumbled at exchanges across Europe and continued to fluctuate sharply in Asia, with the prospect of U.S. retaliatory actions abroad contributing to the pall over the markets. In European stock trading, London's FTSE 100 index fell 3.8 percent, Paris' CAC 40 slipped 5 percent and Frankfurt's Xetra DAX tumbled 6.3 percent. Asian markets were mostly lower although Japan's Nikkei rose 4 percent to climb back above the 10,000-point level. Declines at some exchanges have now reached double digits since the disaster, heightening fears that U.S. stocks will go the same route.
"The U.S. equities markets are in for one heck of a roller-coaster ride on Monday," said Andrew Busch, foreign currency exchange adviser at Bank of Montreal in Chicago. "It is not going to be pretty."
The SEC is leaving in place the current market system of so-called circuit breakers, which automatically halt stock trading when prices drop precipitously. They were established in response to the October 1987 market break to temper wild price swings.
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