Why a contract note is essential

A CONTRACT note is a confirmation of trade(s) done on a particular day for and on behalf of a client.

A contract note issued in the format and manner prescribed by NSE establishes a legally enforceable relationship between the trading member and client in respect of settlement of trades executed on the exchange as stated in the contract note.

Contract notes are made in duplicate, and the member and client keep a copy each. The said contract notes should be signed by a trading member or by an authorised signatory of the trading member.

After verifying the details contained therein, the second copy of the contract note should be returned to the trading member, duly acknowledged by you.

Why should I insist on getting contract/purchase/sale notes for trades executed?

These documents are very important to enforce the deals transacted through the trading member/sub-broker. In case of disputes/claims/differences, these documents would help prove that the transactions have been executed on the exchange through NSE TM/registered sub-broker. These documents are a prerequisite for filing a complaint or arbitration proceedings against TM/registered sub-broker.

Will I get a contract note even if I have dealt with a registered sub-broker?

In case you have dealt through a registered sub-broker, the sub-broker is required to issue purchase/sale notes to you. However, the trading member would issue to your sub-broker back-to-back contract notes giving details of all the transactions done by the sub-broker through the trading member's terminal.

The said notes should be signed by an authorised signatory of the registered sub-broker. After verifying the details contained therein, the second copy of purchase/sale notes should be returned to the sub-broker duly acknowledged by you.

What are the points to be checked by an investor to check the validity of a contract note?

To ensure that the contract note issued to you by the trading member is valid, you must verify the following details:

*The contract note should be in a prescribed format;

*Name and address of the trading member;

*The SEBI registration number of the trading member;

*Details of trade, including order number, trade number, trade time, security name, quantity, rate, brokerage, settlement number and details of other levies;

*The trade price should be shown separately from the brokerage charged;

*Signature of authorised signatory and the arbitration clause stating that the trade is subject to the jurisdiction of Mumbai must be present on the face of the contract note;

What are the points to be checked by an investor to check the validity of a purchase/sale note?

*The purchase/sale note should be in prescribed format, and should include:

*Name, address and SEBI registration number of the registered sub-broker;

*Name, address and SEBI registration number of the affiliated trading member;

*Details of trade, including order number, trade number, trade time, security name, quantity, rate, brokerage, settlement number, details of other levies;

*The trade price should be shown separately from the brokerage charged;

*Signature of authorised signatory and the arbitration clause stating that the trade is subject to the jurisdiction of Mumbai must be present on the face of the contract note.

(Source: www.nse-india.com)