Institutional money managers will not have to disclose their short positions to the public immediately, the U.S. Securities and Exchange Commission said on Sunday.
Under the SEC's emergency rule, the information will be made public two weeks after it is filed electronically to the commission, the agency said in a statement.
The new order will take effect at 12:01 a.m. ET on Monday, September 22, the SEC said.
The decision was a big victory for hedge funds, which had complained that disclosing their short positions immediately would put them at a competitive disadvantage.
On Friday, the SEC temporarily banned short-selling on 799 financial stocks to boost investor confidence, one day after the UK Financial Services Authority took a similar step.
The measure ignited big rallies in financial stocks Friday that have been the target by sellers as the credit crisis worsened.
"The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets," SEC Chairman Christopher Cox said in a statement Friday.
"This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress," Cox said.
The SEC’s emergency order will be effective immediately and will terminate at 11:59 p.m. New York time on Oct. 2, 2008, the Commission said in a statement.
Cox has been under fire for not acting to control the practice that had led to sharp declines in U.S. and European financial stocks since the onset of the credit crunch.
The order may be extended beyond 10 days if the SEC deems an extension necessary in the public interest and for the protection of investors, but the order will not be extended for more than 30 calendar days in total duration, the agency said.
French regulator AMF said it was also talking to other Eurozone regulators about market dealings, leading to expectations that the ban would snowball.
The decision is positive for stocks, analysts said.
"Obviously, the ability not to short will decrease the selling pressure so this is definitely a buying opportunity, but for the short term," Dodge Dorland, Chief Investment Officer at Landor Capital Management, told "Worldwide Exchange."
The SEC order followed a formal SEC meeting Thursday night and a separate extraordinary meeting that Cox and other senior officials attended in the Capitol building the same evening. Senior administration officials asked Congressional leaders for additional authority to soothe turbulent capital markets.
—Reuters contributed to this report