US federal regulators have extended the ban against all short-selling in the shares of around 800 financial companies. The ban is expected to remain in place until October 17 or at least till the Congress passes the finance rescue bill.

On Wednesday, the Securities Exchange Commission announced that it was extending a ban on short selling of shares of several finance companies. The ban was to expire on Thursday but now it will remain in place latest till October 17. More probably, the ban on short selling will come to an end on the third business day after the enactment of the $700 billion finance rescue package which has already been passed by the US Senate and is expected to be placed before the House of Representatives at the end of this week for approval.

The unprecedented ban which was enforced by the Securities Exchange Commission on September 18 prohibited traders from short-selling shares of more than 800 financial companies. The measure was placed in order to shore up investor confidence which had been badly deflated in the wake of the market meltdown and the collapse of major Wall Street firms. Following the ban on short selling, the stock market had fluctuated wildly with the Dow Jones Industrial at one point plunging down by a record 778 points.