The U.S. Securities and Exchange Commission issued an emergency order on Tuesday to prevent “naked” short selling in the securities of major brokerage firms, investment banks and mortgage lenders Fannie Mae and Freddie Mac.

The order, which requires that anyone effecting a short sale in these securities arrange beforehand to borrow the securities and deliver them at settlement, is in effect from July 21 to 29. Along with Fannie and Freddie it applies to firms such as Citigroup, Goldman Sachs, Lehman Brothers and UBS.

In addition to this emergency order, the SEC will undertake a rulemaking to address these issues across the entire market.

“The SEC’s mission to protect investors, maintain orderly markets, and promote capital formation is more important now than it has ever been,” said SEC chairman Christopher Cox in a release. “Today’s commission action aims to stop unlawful manipulation through ‘naked’ short selling that threatens the stability of financial institutions. We will continue our vigorous commitment to investors by working within the SEC and in close cooperation with our regulatory counterparts to promote the continued health and vibrancy of our markets.”

Additionally, Moody’s Investors Service downgraded its preferred stock and financial strength ratings on Fannie Mae, citing two major issues: diminished financial flexibility due to adverse market conditions; and, the increased potential for credit losses in excess of Moody’s prior expectations. “Adverse market conditions have reduced Fannie Mae’s ability to raise additional equity capital. This limits the company’s ability to build further cushion to offset unanticipated stresses in its asset quality,” said Moody’s senior vice president Brian Harris. The rating agency also affirmed its debt ratings.