What Is The Format Of A Contract Note Prescribed By SEBI?

By now you must have read a lot about investing in the stock market. Suppose you have already purchased some securities.  Once the transaction is completed, generally a notification pops in. This notification will confirm your purchases. And your transaction is complete.

Is this all?

After your transaction is complete check your e-mail id. Apart from the notification received, you will also receive few e-mails on the confirmation. Among those e-mails, you will get a pdf document of your “Contract Note.”

Contract Note is a legal document which should be properly documented by the investor. Earlier physical Contract Notes were dispatched to the investors. However, with the dematerialization, physical Contract Notes have discontinued.

In this blog, we will be discussing Contract Notes.

What is a Contract Note?

A Contract Note is issued to the investor by the trading member for all the trades done on a particular day. It is the evidence of the trade done by the investor.Contract Notes are regulated under the directions of the Securities & Exchange Board of India (SEBI).

The format for a  Contract Note is also prescribed by SEBI. You receive the Contract Note from the stockbroker, mostly at the end of the day. A Contract Note helps to get all the information of the transactions done by the investor whether it is buying the securities or selling the same.

The Format of a Contract Note

SEBI is the regulatory body governing all the rules and regulations pertaining to the Securities Market. Hence, the format of Contract Notes is also prescribed by SEBI.

Let us discuss the content of the Contract Note:

• On the top of the Contract Note, you will find the name of the trading member along with its address and SEBI registration number.

• After this, on the left side of the note, you will find the following:
  • Contract Note Number
  • Trade Date
  • Name of the client
  • Address of the client
  • PAN of the client
  • Unique Client Code (UCC) of client – This is the id which helps you to log in and trade.

• On the right side, you will find three columns stated as whether you have traded on National Stock Exchange (NSE), Bombay Stock Exchange (BSE) or Multi Commodity exchange (MCX) platform. Aligned to this you will find the Settlement No and Settlement Date under the respective exchange heads as mentioned above.

• After this part, you will find the part where every detail of your transaction is mentioned:
  • Order No.
  • Order Time
  • Trade No.
  • Trade Time
  • Security or Contract Description
  • Buy (B)/ Sell (S)
  • Quantity
  • Gross Rate
  • Brokerage per unit
  • Net Rate per unit
  • Net total

Under this part, you will the details of all the transactions (buy/sell) done by you along with the rates and quantity purchased in the above serial as mentioned above.

Also Read : Role, Objective, Structure and Functions of SEBI

• After this you will find details of the total payout/ pay-in made in the following manner:
  • Pay in/ Payout obligations
    • Brokerage Charges
    • Exchange transaction charges
    • GST @18% on the brokerage and transaction charges
  • Securities Transaction Tax
    • SEBI Turnover fee
    • Stamp Duty

Also on request, they may provide you trade-wise details instead of the consolidated statement.

The transactions are governed by the rules and regulations of the respective stock exchange and SEBI.  Nowadays Contract Notes are digitally signed by the trading member.

Need for Contract Notes:

With the innumerable traders participating in the stock market, it is becoming difficult to track frauds and cyber crimes. In order to trade safe, it is always advisable to document the Contract Note as legal evidence.

The important usage of Contract Notes are  mentioned below:

• Computation of Total Capital Gains/ Losses for the purpose of Return filing
• Computation of the Total brokerage charged by the Trading member
• In a case of failure in the delivery of stock, Contract Note is a legal proof for an arbitration or dispute resolution.

You can also find the sample copy of the contract note here.

Happy Learning!!