The Toronto Stock Exchange has issued a reminder to brokerage firms about the Client-Principal trading rule.

In a regulatory notice issued today it notes that brokerages “are reminded that the Client-Principal trading rule applies to orders of up to and including 5,000 shares. Market surveillance has detected numerous inadvertent violations for client-principal crosses of exactly 5,000 shares.”

It says that approved traders, “must understand and comply with their obligation to obtain the best price for all client-principal trades, including orders for greater than 5,000 shares. Although price improvement is not always required for orders larger than 5,000 shares, [the rule] requires reasonable steps be taken to ensure that clients receive the best available price and that the price is justified by the condition of the market.”

TSE Regulation Services says it expects brokerage firms, “to take the steps necessary to ensure that their traders know and understand the rule”.