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A contract note is a legal record of stock market transactions, summarising trade details, charges, and execution. Issued by brokers, it helps investors verify trades and understand associated costs. This page explains the purpose, structure, and interpretation of contract notes in detail.
A contract note is a document issued by a stockbroker within 24 hours of a trade, confirming buy or sell transactions on a stock exchange. Mandated by SEBI, it serves as a legal record of the trade, promoting transparency and helping resolve disputes if they arise.
Contract notes provide the critical audit trail necessary for maintaining transparency in stock transactions. For investors, this document:
Verifies that trades were executed as per their instructions
Offers a breakdown of charges including brokerage, taxes, and levies
Helps during tax filing and financial audits
Protects against potential disputes by providing legal proof
Supports clarity in portfolio tracking
When matched against personal trade records, contract notes ensure that the execution of the trade aligns with market standards and investor instructions.
Each contract note contains multiple sections that break down the financial and legal particulars of the trade. Understanding these components helps investors read the note with confidence:
Broker and Client Details: Includes the name, address, and SEBI registration number of the broker; and the name, address, and unique client code of the investor.
Trade Information: Lists the order number, trade number, stock name, ISIN (International Securities Identification Number), order time, trade time, quantity, and price.
Charges Breakdown:
Brokerage: Commission charged by the broker
Exchange Transaction Charges: Levied by the stock exchange
SEBI Turnover Charges: Regulatory charges collected by SEBI
Stamp Duty: As per state laws
Securities Transaction Tax (STT): Applicable on certain types of trades
GST: On brokerage and transaction charges
Net Amount Payable or Receivable: Indicates the final amount after deducting all charges
Annexure: A trade-level breakdown of all buy and sell transactions
Understanding these terms is essential to ensuring accuracy in execution and compliance.
Knowing how to interpret a contract note equips investors with the ability to cross-verify their trades effectively. Here are the steps to follow:
Verify Your Details: Check your name, client code, and PAN details
Match the Stock Details: Cross-check the ISIN, quantity, and stock name
Examine the Charges: Ensure brokerage, GST, and other levies are accurately listed
Understand WAP (Weighted Average Price): Helps in knowing the average price for multiple trades on the same security
Refer the table below:-
Section |
Details Contained |
|---|---|
Broker Details |
Name, address, SEBI Reg. ID |
Client Details |
Name, Client Code, PAN |
Trade Info |
Order ID, Trade Time, Stock, ISIN |
Charges |
Brokerage, GST, STT, Exchange Fees |
Settlement |
Net Payable/Receivable |
Annexure |
Detailed trade-wise listing |
Contract notes are generally delivered in two formats. While physical copies were the norm earlier, digital or electronic contract notes (ECNs) are now widely adopted. Here's a closer look at both formats:
Electronic Contract Note (ECN): Sent via email in PDF format within 24 hours of trade execution. Password-protected for security.
Physical Contract Note: Mailed or delivered in print upon specific investor request. Less common today due to operational inefficiencies.
ECNs are eco-friendly, faster to deliver, and easier to store or retrieve during audits and reconciliations.
SEBI and stock exchanges periodically update contract note formats to ensure clarity, uniformity, and better investor experience. Recent developments include:
Unified Format: Across all trading segments (cash, derivatives, currency, commodities)
Annexure Enhancements: Clearer trade-wise details
Improved Cost Disclosure: Full transparency on every charge
Password Standards: Secure delivery of electronic contract notes
These changes make contract notes easier to interpret and reduce confusion for investors.
While most contract notes are auto-generated, errors can still occur. Common issues include:
Incorrect client code or PAN details
Discrepancy in trade quantities or stock names
Charges applied incorrectly or omitted
Investor Checklist:
Always compare contract note with trade confirmation messages
Raise discrepancies with the broker immediately
Retain contract notes for tax and audit purposes
Regular scrutiny can help avoid future disputes and financial inconsistencies.
Contract notes are essential for confirming trades, tracking charges, and supporting accurate financial records.
This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.
Contract notes must be issued within 24 hours of the trade execution day, as per SEBI guidelines.
Yes, investors can request a physical copy, although most brokers now issue digital contract notes as default.
WAP = (Total Value of Shares Bought or Sold) / (Total Quantity of Shares)
Annexures provide a detailed, trade-wise breakdown of all transactions conducted during the trading day.
Immediately contact your broker, provide supporting documents, and ensure the issue is resolved within the stipulated time under SEBI's investor grievance mechanism.
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