For these reasons, the division believes that relatively low margins may contribute to increased concentrated institutional trading and resulting greater price volatility.

Some money managers say that one reason for reduced institutional trading is that the brokers themselves are not feeding them good investment ideas.

He was formerly the vice president for an institutional trading and hedge fund account for futures-related products.

In other words, retail clients are encouraged to buy and hold so as to maintain market liquidity for the institutional trading.

Will public markets provide enough liquidity for institutional trading?

Analysts attributed the heavy turnover to institutional trading, primarily to complicated Japanese tax strategies that revolve around capturing and avoiding utility dividends.

"I think institutional trading has been the driving force of what has been going on in the market," he said.

"This rule will help minimize the impact of institutional trading on the marketplace."

Among these are declining interest rates, calmer mutual fund customers, new restrictions on institutional trading and more sensible use of "portfolio insurance."

The liquidity that comes with institutional trading is essential to small capital markets.