Market Regulation Services Inc. has issued a notice that provides guidance on its expectations regarding compliance with the “best price” obligations in an environment of multiple transparent marketplaces.

In particular, the notice focuses on the expectations of RS as a result of the launch of continuous auction market trading on Pure Trading of securities listed on the Toronto Stock Exchange.

In the view of RS, the “best ask price” and “best bid price” can only be determined by reference to orders on marketplaces that provide pre-trade transparency. In order for a participant to demonstrate that it had made “reasonable efforts” to execute a client order at the best price, RS expects that it will deal with “better-priced” orders on another marketplace if that marketplace: disseminates order data in real-time and electronically through one or more information vendors; permits dealers to have access to trading in the capacity as agent; provides fully-automated electronic order entry; and, provides fully-automated order matching and trade execution.

Of the current marketplaces, only CNQ (including Pure), TSX and TSX Venture Exchange meet all four conditions, it says. The other ATSs do not disseminate order data, it adds.

Therefore, RS says that firms have an obligation to execute against better-priced orders on CNQ, Pure, TSX and TSXV before executing at an inferior price on any marketplace or foreign organized regulated market. The notice then spells out the regulator’s expectations regarding compliance with this obligation.