The Securities and Exchange Commission (SEC) plans to institute a new rule to limit the ability of traders to bet on a drop in shares of brokerage firms Freddie Mac and Fannie Mae to reduce stock manipulation. The order, to be in effect for 30 days, will stem a practice called "naked short selling," in which traders avoid financial costs of borrowing shares while betting they'll fall. Short sellers borrow shares from brokers or institutional investors and sell them, hoping to buy them back later at a lower price and profit from the difference. SEC Chairman Christopher Cox told the Senate Banking Committee that his agency will require traders to hold shares of the two mortgage buyers and the brokerages before they execute a short sale. Cox also said the SEC will draft rules to limit the practice across the entire market. The SEC is investigating whether such trading abuses may have contributed to the fall of Bear Stearns Cos. in March and the recent 80% drop in market value Lehman Brothers Holdings.