Emergency restrictions on short-sales in 17 Wall Street firms and housing-finance giants Fannie Mae (FNM) and Freddie Mac (FRE), due to expire just before midnight Tuesday, have been extended through August 12, the Securities and Exchange Commission announced.

The SEC said the additional 10-day extension will give its staff time to collect and analyze data on the impact and effect of the order. It said it would move "immediately" afterward to consider rules imposing short-sale restrictions on the broader market.

The SEC issued the emergency order on July 15, citing concerns that rumor-mongering could spark "sudden and excessive fluctuations" in stock prices and disrupt the fair and orderly functioning of U.S. markets.

The SEC said once the order expires on August 12, it "will not be further extended."

If regulators want to continue the short-selling restrictions for the stocks, they would need to do so through rulemaking. The lengthy federal rulemaking process could be accelerated by issuing interim final rules that are effective immediately but still subject to public comment and possible revisions in the future.

Expanding the restrictions to other stocks could be next.

"That would be a natural follow-on to the emergency action that the commission has already taken," SEC Chairman Christopher Cox told reporters after a press conference at the Labor Department on Tuesday.

According to Cox, "the general approach that the commission will take is to commence notice and comment rulemaking at the earliest possible time to ensure that appropriate protections against illegitimate naked short selling apply generally across the entire market."

The SEC emergency order, which took effect Monday, July 21, applies to Fannie Mae, Freddie Mac, and to 17 publicly-traded Wall Street firms that are primary dealers in U.S. Treasury securities. All 19 firms covered by the order have been given access to borrowing from the Federal Reserve, once reserved for commercial banks.

The order requires short-sellers to pre-borrow shares before engaging in short sales of the targeted companies, which Cox has said is aimed at abusive "naked" short sales. In a last-minute change, announced July 18, the SEC excluded market makers in the stocks from the pre-borrowing requirement.

Short sellers sell borrowed shares in hopes of replacing the shares later at a lower price. The practice is legal and produces profits when stock prices decline. "Naked" short sellers don't borrow shares in advance of short sales, and may never intend to borrow them, which can have punishing effects on a stock's price. While the SEC has tightened rules in recent years to curb naked short selling, it hasn't previously insisted that shares be borrowed before they are sold short.

Cox said the SEC is looking forward to analyzing data on the effect of the temporary restrictions, and has heard that all of its recent actions have "helped to control illegitimate rumor-mongering and other techniques of market manipulation."

In addition to Fannie Mae and Freddie Mac, the stocks covered by the order are: BNP Paribas Securities Corp. (BNPQF, BNPQY), Bank of America Corp. (BAC), Barclays PLC (BCS), Citigroup Inc. (C), Credit Suisse Group (CS), Daiwa Securities Group, Inc. (DSECY), Deutsche Bank Group (DB), Allianz SE (AZ), Goldman Sachs Group Inc. (GS), Lehman Brothers Holdings Inc. (LEH), Merrill Lynch & Co. (MER), Morgan Stanley (MS), Royal Bank ADS (RBS), HSBC Holdings PLC (HBC), JPMorganChase & Co. (JPM), Mizuho Financial Inc., (MFG), and UBS AG (UBS).