At Schwab, Tighter Rules for Tech Stocks

The leading online brokerage stiffened rules Monday for stock investors using borrowed money to buy certain technology shares, while a Nasdaq advisory panel said it might urge trading halts in especially volatile equities.

Charles Schwab Corp. increased to 70%, from 50%, the amount of investor assets required to back up any of 23 Internet- and computer-related stocks bought with borrowed money.

It’s San Francisco-based Schwab’s second increase in its “maintenance margin” since December, when the brokerage raised the required amount of assets backing investments in certain stocks to 50% from 35%.

“Schwab is reviewing all their client accounts to look at their access to margin and they’re also protecting themselves,” said Henry McVey, analyst with Morgan Stanley Dean Witter & Co. “They’re taking an active stance to what has been a hot area for online retail trading.”

Among the stocks affected are Schwab’s two main publicly traded competitors in the online brokerage industry, E-Trade Group Inc. and Ameritrade Holding Corp., as well as Yahoo Inc. and EBay Inc.

Meanwhile, a Nasdaq Stock Market panel said it may recommend a rule to temporarily halt trading of volatile stocks to let investors adjust to rapidly changing share prices.

“We’ve been discussing trading halts in concept, and odds are about 50-50 that we’ll recommend a specific proposal in the next few weeks,” said Patrick Campbell, Nasdaq’s chief operating officer.

Some other panel members said the group almost certainly would make such a recommendation.

The ad hoc panel was convened two months ago to look at ways to respond to wide daily price swings on some Internet company stocks, many of which are traded online. Any recommendation would have to be approved by the National Assn. of Securities Dealers’ board and the Securities and Exchange Commission.