What is a Contract Note and why is it important?
The Contract Note as a concept originated when electronic trading did not exist. Back then, investors would personally contact their brokers to place orders for stocks and bonds. The brokers would then execute the trade and send a confirmation of the price to the investor. The contract note was used as a de-facto reference point for investors to see their trades and the price at which they were made.
Times have changed now, investors can now see their trades being executed in real time with Exchange Order Numbers and time stamps. With trading going online, investors get the Contract Note via email, and physical copy on the same day () as the processing time is reduced and the note is system generated.
The function of a Contract Note still remains the same. It is still the legal record of any transaction carried out on a stock exchange through a stockbroker and it still serves as the confirmation of trade done on a particular day on behalf of an investor on a stock exchanges.
It is a receipt that the broker issues to the investor, informing or confirming the trade with complete details of the transaction in a prescribed format by Stock exchanges.
A valid Contract Note has the following details in a structured format:
- SEBI registration number of the Trading Member / Sub-broker
- Details of trades: Order number, Trade number, Trade price, Trade execution time, Traded security and quantity, Brokerage charged, Details of other service charges
- Signature of Authorized Signatory or Digital Signature in Electronic format
- Bylaws and regulations pertaining to Arbitration
How do you acquire a Contract Note?
There are two ways to acquire a Contract Note:
Online: Your Contract Note will be mailed to your email account in electronic format automatically after making your transaction.
Offline: Your broker/trading member will send your Contract Note to delivered to the registered address.