A contract note is the legal record of any stock exchange transaction facilitated by a stockbroker.
It serves as confirmation of a trade executed on behalf of a client on a certain day on a stock market.
The date, time, price, quantity transacted, and other important facts of a transaction are described in a contract note.
It also has a Reference Number that may be used to double-check the transaction’s information with the stock exchanges. A contract note is crucial because it certifies all the details of the trades that were completed on a certain day.
Few constituents of a Contract Note are:
- The number and sequence of the trades that have been completed.
- The trade’s execution sequence and timing.
- The name and symbol of the traded security.
- The sort of activity taken, such as selling or buying shares or assets.
- The type of trade that was executed – intraday or delivery.
- The trade’s price in relation to the quantity traded.
- Any costs or charges that were imposed – brokerage fees and charges,
- The net profit or loss from the trade – payable or receivable.
A good contract note should include the following information in a standardised format: the SEBI registration number of the trading member/sub-broker; order number, transaction size, transaction price, trade time, traded amount, brokerage paid, settlement reference number, and other service charges information.
An authorised member’s signature or a digital signature is necessary for the electronic format. Arbitration rules and bylaws
Conclusion: the contract note serves a purpose, A contract note is used to confirm all an investor’s or trader’s trades on a particular day.
When traders engage in online trading, a contract note is generated, and the total amount of brokerage charged is calculated.
The net amount payable or receivable is clearly stated for clear knowledge of the trader.
It is helpful at the time of settlement of disputes and claims between the investor and the trading member or broker.