Contract notes record stock market transactions
A contract note is a legal document that contains the details of stock market transactions undertaken by a member of a stock exchange on behalf of a client.
The format and content of a contract note is specified by the Securities and Exchange Board of India (Sebi). It should clearly identify the client and mention the unique client code assigned by the member. Similarly, it should identify the trading member by Sebi registration number and trading member code.
The note should give the relevant settlement number and period for transactions. Also, it should contain the details of transactions such as the securities bought or sold, quantity, gross rate per security, total transaction value, brokerage and other statutory levies. It should also give the order number, trade number and trade time for each transaction. It may be issued electronically but should be digitally signed.
Contract notes give rise to contractual rights and obligations of parties to a trade. An investor should, therefore, ensure that they receive a contract note from the stock broker for every transaction. It is the legal proof in case of any disputes.