NEW YORK (Reuters) – Financial industry observers are increasingly skeptical that the U.S. Securities and Exchange Commission's planned proposal to require a uniform fiduciary standard for all financial advisers will become a reality this year, if ever.

The SEC said it would propose the rule, which would hold both fee-based financial advisers and commission-based brokers to the same fiduciary standard, during the second half of 2011. But that didn't happen and earlier this month the agency said it was drafting a request to ask the public for more data in order to do a cost-benefit analysis of the proposal.

Industry heavyweights and advisers who attended The John C. Bogle Legacy Forum on Tuesday at the Museum of American Finance said that even if the agency manages to finish its analysis and come up with a proposal in the next few months, they do not expect an actual rule to come about this year. Some observers now believe the rule might never come to fruition.

"I don't think you will see a rule before the presidential elections," said Harvey Pitt, chief executive of global business consulting firm Kalorama Partners LLC and a former SEC chairman, in an interview with Reuters at the forum.

If President Barack Obama wins a second term and Republicans keep control the House of Representatives, partisan fighting could further delay a final rule, Pitt said.

The proposal's genesis stems from the Dodd-Frank financial reform law, which required the SEC to study whether there should be a uniform fiduciary standard for advisers and brokers. The study, which was released almost a year ago, recommended a uniform standard.

Currently financial advisers are held to a "fiduciary" standard, which means their recommendations must be in the best interest in their clients. Brokers are held to a "suitability" standard, meaning that any products they recommend must be suitable for their clients, though the products need not be in their best interest.

Some industry officials say they are glad to see the agency taking its time with the proposal given the complexities around it, including how to enforce it and how far-reaching it should be.

"This is a really difficult issue that the SEC has to address," said T. Timothy Ryan Jr., chairman of the Securities Industry and Financial Markets Association, in a panel discussion at the forum.

SIFMA favors a uniform fiduciary standard but wants it to be nuanced in order to address the different business models used in the financial advice industry. "We need to recognize that business is done differently for a small independent financial advisory shop, compared to one of these large firms (with) a very different business model."

Ryan and others say they hope that the latest delay could be good for another reason. It could prompt the SEC to work closely with the Department of Labor, which is working on its own standard of fiduciary care for advisers serving retirement plans. "We have multiple fiduciary standards floating around," Ryan said.

An SEC spokesman said the proposal remains a priority for the staff but that the agency has not determined when it will be finalized.

A number of attendees at the forum told Reuters that they would be surprised if a final rule ever gets enacted. Companies have a multitude of perspectives on the proposal and there is almost no consensus among them.

"The structure of so many firms require them to push certain products," said Guy G. Rutherfurd Jr., a partner and portfolio manager with F&V Capital Management LLC, a registered investment adviser attending the forum. These firms do not want to see a uniform standard, he said.

Wall Street companies do not want to change their way of doing business and will continue to fight any rule that forces them to do so, said Michael Zeuner, senior executive partner at GenSpring Family Offices. Last summer Zeuner helped found The Institute for the Fiduciary Standard, an group designed to raise awareness around the need for a uniform fiduciary standard. But he's not hopeful a rule will ever be presented.

"I don't think Washington is going to do what is necessary," Zeuner said. "Too much of the conversation is around what's right for the industry, and not what's right for investors."

(Reporting By Jessica Toonkel; Editing by Jennifer Merritt)

Stocks are swinging between gains and losses as investors try to guess whether debt standoff in Washington will be resolved.

Stocks plunged early Friday after the government said that the economy grew at its weakest pace since the recession ended.

Traders already were on edge about a stalemate between lawmakers that threatens to push the nation into default for the first time. The Treasury says it might run out of cash after Aug. 2.

Major indexes recovered some losses by midday as a debt deal appeared more likely.

Just before noon, the S&P 500 index is down a point, or 0.1 percent, at 1,300. The Dow Jones industrial average is down 33, or 0.3 percent, at 12,207. The Nasdaq composite index is up 5, or 0.2 percent, at 2,771.

WASHINGTON – Global stock markets staged an explosive rally Thursday, embracing a move by the Federal Reserve to try to rejuvenate the U.S. economy by buying $600 billion in Treasury bonds.

The Dow Jones industrial average reached its highest point in more than two years, and stocks surged from Tokyo to London.

Elsewhere around the world, economic dominoes began to fall: The dollar sank. Oil prices surged. And Asian countries raised fears that their currencies would rise relative to the dollar, making their exports more expensive.

And some fretted about the prospect of financial instability in Asia and other regions. But stock investors, at least, celebrated the Fed’s move.

Fed Chairman Ben Bernanke said the bond purchases would drive down interest rates on mortgages and other borrowing. That could get individuals and businesses to borrow and spend and aid a U.S. economy stuck with 9.6 percent unemployment.

Two developments, in particular, seemed to cheer investors: In announcing its $600 billion bond-buying program, the Fed left the door open to further action later. And in an opinion piece published Thursday, Bernanke envisioned higher stock prices as part of “a virtuous circle.” He defined it this way:

Lower interest rates on loans will encourage companies to borrow and expand. Cheaper mortgages will let more people buy or refinance. Higher stock prices will boost the wealth and confidence of both individuals and businesses. Spending will rise, lifting incomes, profits and economic growth.

“A light bulb has gone on” in investors’ heads, said Brian Bethune, chief U.S. financial economist at IHS Global Insight. “They’re thinking: ‘Maybe this will work.’”

The response to the bond-purchase program, dubbed “QE2″ because it’s the second round of what’s called “quantitative easing,” was powerful. It cut across all corners of global financial markets:

• Stocks jumped 2 percent in London, 1.9 percent in Paris, 1.6 percent in Hong Kong, 2.2 percent in Tokyo. The Dow Jones industrial average hit its highest level since August 2008, rising nearly 220 points to 11,434. Lower interest rates could spur economic growth and also make stocks more attractive compared with Treasury bonds with puny yields. In India, stocks hit a record.

• The dollar sank to a nine-month low against the euro and fell against the Japanese yen and the British pound. The Fed’s bond purchases flood financial markets with dollars, diluting the dollar’s value against other currencies.

• Oil prices jumped $1.73 to $86 a barrel. Foreign buyers were attracted to oil because it’s priced in dollars. Demand for oil tends to rise when the dollar’s value falls, because it becomes a bargain for buyers using other currencies.

• Gold prices hit a record high on fears the Fed’s move will unleash inflation. Investors often seek sanctuary in gold, a tangible asset, when they fear that rising prices will erode the value of money.

• China and other countries warned that the Fed risks destabilizing the global economy by printing more dollars, the currency of international commerce. “So long as the world shows no restraint in issuing reserve currencies such as the dollar … the outcome will be what knowledgeable Westerners dread: Yet another crisis is inevitable,” Xia Bin, an adviser to the People’s Bank of China, wrote in a commentary.

• Developing countries in Asia complained the money generated by the Fed purchases will join a flood of cash already pouring into the region in search of better returns. That money is pushing up their currencies and hurting their exporters. They also fear that a flood of new dollars will fan inflation, cause price bubbles in stocks and other assets and destabilize their financial systems.

As the Fed’s new program drives down yields on U.S. Treasury bonds, many investors will shift money to other countries or riskier investments, such as stocks, that offer better returns.

Rising asset prices can be rewarding, at least in the short run. But over time, they raise the danger that speculators will drive prices of stocks, real estate or other assets so high that a crash, like the U.S. housing bust, becomes inevitable.

That fear is growing in Asia and elsewhere.

“These countries say, ‘We cannot even absorb our own savings,’” says Marc Chandler, global head of currency strategy at the investment firm Brown Brothers Harriman. “Now we’ve got to handle the world’s savings?”

They also worry that the “hot money” flooding into their economies will vanish once global investors find another fad to sink their money into. That would burst any bubbles in stocks or other assets, just as in the 1997-98 Asian financial crisis.

In the United States, stocks have been rallying since late August, when Bernanke announced in a speech in Jackson Hole, Wyo., that the Fed was prepared to do more to spur economic growth if necessary.

Fed leaders think Wednesday’s action will be the equivalent of a three-quarter-point reduction in the Fed’s benchmark interest rate. In normal times, cutting that benchmark rate by three-quarters of a percentage point could give the economy a healthy jolt. But that option is unavailable now because the Fed has already pushed that rate near zero.

In making the $600 billion in bond purchases, the Fed essentially prints money. It doesn’t increase the debt the Treasury Department sells. Rather, the purchases expand the pool of buyers for that debt by adding the Fed to the mix.

Mindful of the weak U.S. economy and high unemployment, some want the Fed to do more, not less.

Joseph Gagnon, senior fellow at the Peterson Institute for International Economics and a former Fed official, was unimpressed by Wednesday’s announcement: “This is a small step in the right direction,” he says. “But I view it as timid.”

He would like to see the Fed buy twice the $75 billion in bonds that it plans to buy each month. He also suggests the Fed stop paying interest on money that banks have parked with the Fed. That might force them to step up lending.

The Fed made a big impact the first time it announced quantitative easing, in March 2009. Its purchase of $1.7 trillion in government bonds and mortgage securities calmed markets still jittery after the financial crisis of 2008. It sent the Dow soaring 16 percent over the next seven weeks. And the recession ended that June, economists say.

Among those who worry about the risk of inflation or speculative bubbles is Thomas Hoenig, president of the Federal Reserve Bank of Kansas City. Hoenig dissented from the Fed’s latest move for those reasons.

Bernanke discounts such fears. In his opinion piece Thursday, he expressed confidence that the Fed has the tools to soak up the extra money when the time comes, without harming the economy.

“We have made all necessary preparations, and we are confident that we have the tools to unwind these policies at the appropriate time,” Bernanke said in the article published in The Washington Post.

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AP Business Writers Jeannine Aversa and Martin Crutsinger in Washington, Joe McDonald in Beijing and Sandy Shore in Denver contributed to this report.