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SEC urged to tighten market maker rules

Senator says high-frequency traders should be legally bound to provide liquidity to prevent repeat of flash crash

A senior Democratic senator said some high-frequency traders should be legally bound to provide liquidity to US stock markets as part of efforts to prevent a repeat of the May 6 "flash crash."

Sen. Charles Schumer (D., N.Y.) called on regulators yesterday to clarify the role of the market making firms that are supposed to maintain liquidity. He also proposed new rules aimed at ensuring they don't exit when trading becomes volatile.

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