The Securities and Exchange Commisssion has acted to reduce the opportunity for insider trading by authorizing brief trading halts across domestic markets when important news affecting a specific stock is pending.

The commission, by a 3-2 vote, has given the National Association of Securities Dealers authority to ban over-the-counter trading in exchange-listed stocks, a practice called "Third Market trading."Currently, when the New York Stock Exchange or another exchange halts trading because of a pending announcement, the NASD can bar its member firms from using the association's automated systems to offer quotes on the stock.

However, it cannot bar brokerage firms from making a private market while exchange trading is halted.

Some firms, such as Jeffries & Co., have been willing to act as an intermediary for professional traders who want to buy and sell stock before announcements of takeovers, major contracts and other news.

SEC Chairman David S. Ruder, in supporting the proposal, said it would reduce the opportunity for insider trading. He also said he was troubled by the current arrangement, which appears to favor professionals with more access to market information over small investors.

Any perception that professional investors are being given an advantage will harm efforts to encourage small investors, rattled by the October stock market crash, to return to the market.

The action was opposed by commissioners Charles C. Cox and Joseph A. Grundfest, who argued that it would unnecessarily restrict the freedom of the market.

Grundfest said shareholders have a right to reduce their risk by selling stock before an announcement and that a trader willing to take on the risk had a right to buy. He said the rights of small investors would not necessarily be enhanced by restricting professional traders.

Cox said he has seen no evidence that small investors have been harmed by their inability to take part in Third Market trading.

He said insider trading is rarely caused by the ability to trade a few minutes before a news release. "You can always prevent insider trading by preventing trading, but obviously we are not going that far," he said.