The U.S. Securities and Exchange Commission said it will meet on April 8 to consider whether to propose short sale price test rules, which could include reinstating the so-called uptick rule.

The uptick rule, adopted after the 1929 stock market crash, allowed short sales only when the last sale price was higher than the previous price. The SEC abolished the rule in 2007, after concluding that advances in trading strategies rendered it ineffective.

The SEC put up temporary hurdles to short-selling last year at the urging of distressed financial firms, and some lawmakers, who charged that aggressive short-selling was exaggerating the drop in share prices.

In late July and early August, short sellers had to show they had pre-borrowed stock before making short trades in 19 financial stocks. A temporary ban on short-selling in hundreds of companies followed, but expired in October.

Many experts judged the measures ineffective. Then SEC Chairman Christopher Cox later said he had some regrets over the emergency measures. At the time there were calls for reinstating the uptick rule.

Cox's successor, Mary Schapiro, said earlier this week that the agency aimed to issue a proposal in April to restore the uptick rule. She also said the SEC will look at other ways to address short-selling in the stock market.

Barney Frank, who chairs the U.S. House of Representatives Financial Services Committee, told reporters on Tuesday he hoped the uptick rule would be reinstated within a month. But the SEC said any proposal would likely be subject to a public comment period. That could mean a final rule is months away.

Short-sellers borrow stocks they expect will fall in price in the hope of repaying the loans for less and pocketing the difference. They defend their role, saying they prevent shares from becoming overvalued.

The SEC last year included an exemption for option and equity market makers so they could continue to add liquidity to the markets. Despite that exemption, some experts have said there was less liquidity.

In options, the impact of the reinstatement of the short sale rule is going to have a lot to do with what the Commission does on market maker exemption for bonafide hedging, said Ed Boyle, senior vice president of NYSE Euronext Inc , which owns both the Arca Options and the NYSE Amex Options exchanges.

(Reporting by Karey Wutkowski with additional reporting by Doris Frankel in Chicago; editing by Carol Bishopric and Tim Dobbyn)