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Prior to passage of securities legislation in the United States in the 1930s, many securities firms sold one-day or other short-term, over-the-counter, down-and- out calls or up-and-out puts. This practice was called bucketing, and the firms were called bucket shops. The term, which apparently originated in the practice of carrying beer into brothels in buckets, now characterizes any disreputable securities firm. Many states in the United States have bucket shop laws which impinge on the ability of financial intermediaries to create and trade certain types of over-the-counter instruments.
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