(Reuters) - U.S. regulators may get the ammunition they need to impose new market rules when they meet an advisory panel on Friday to discuss the May 6 plunge that briefly sent the equities market and related futures into a tailspin.

The 'flash crash' advisory group, composed of former regulators, financial players and a top economist, will review a government report that partially blames the dramatic market fall on a single trade by a mutual fund.

The panel is expected to discuss potential recommendations and give the Securities and Exchange Commission and Commodity Futures Trading Commission justification to tinker further with market rules.

"They've obviously been under pressure to put recommendations out," said a Washington D.C.-based industry source.

"Do they put something generic out because they need to put something out, or have they actually come to some conclusion as to what they think the right changes are going forward?" asked the source.

CFTC Chairman Gary Gensler has said the meeting will help his agency as it grapples with curtailing practices it considers disruptive to markets.

The SEC is under pressure from some lawmakers to adopt rules to rein in high frequency traders, where computer-driven algorithms are used to quickly create and execute trades.

The flash crash report by the SEC and CFTC has riled some market players who say the $4.1 billion sale of e-mini futures contracts by Waddell & Reed Financial could not have caused the Dow Jones industrial average to plummet roughly 700 points in minutes before recovering.

"Absolutely there is a need for change, and the big question is should this change come from the industry or should it be imposed by regulators," said Michael Gorham, a professor at the Illinois Institute of Technology and former director of the CFTC's division of market oversight.

RULES IN HORIZON

In response to the brief market crash, the SEC rolled out a "circuit breaker" program to give a company's stock a reprieve from trading if the stock is in free fall. The program ends December 10, and the SEC is pressuring exchanges to come up with a "limit up/limit down" proposal by early December, sources have said.

That would set temporary price ceilings and floors for single stocks and could slow big price changes without stopping trading.

The SEC also is mulling tighter rules for market makers to ensure they will be able to provide liquidity to markets and avoid a repeat of what happened during the flash crash when some market makers and big trading firms stopped trading and there were few buy orders for stocks.

Exchanges have submitted proposals to the SEC that would eliminate stub quotes, quotes that are priced well off the public price of a stock. The SEC has yet to approve of the proposal.

The SEC also is considering a new market wide "circuit breaker" to temporarily pause trading if a market is in crisis. Although there are market-wide circuit breakers in place already, they were not triggered on May 6.

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