What is Contract Note in Stock Market?
Contract notes are one of the most important legal
papers available for stock market investors. It keeps track of all transactions
at one location, as well as profit and loss information. The availability and
legality of important information relating to a transaction makes it critical
for an investor or trader to truly understand the market in this document.
Any trade made by a stock broker on a stock market is
recorded by a contract note. It confirms a trade executed on the client's
behalf on a stock exchange (BSE / NSE) on a given day. This document is sent to
you by your broker and contains information about the shares you bought or sold
through him. It's also possible that the document will be provided in
electronic format with a digital signature.
What are
the Contents of a Contract Note?
The primary contract information is outlined in the
contract note, which includes the date, period, size, quantity exchanged, and
so on. This also gives you a reference number that you can use to double-check
transaction data with the stock exchanges.
In a standardized format, a good contract note should
have the following information.
·
Trading member/sub-broker's
SEBI registration number
·
Order number, transaction size,
transaction price, trade time, traded amount, brokerage paid, settlement
reference number, and other service charges information are all examples of
trade information.
·
For the electronic format, an
authorized member's signature or a digital signature is required.
·
Arbitration rules and bylaws
Significance
of Contract Note
As the number of people investing in the stock market
grows, the odds of fraud and conflict expand as well. SEBI has taken a number
of steps to protect the interests of all investors. The digital contract note,
which shows the price, brokerage, service tax, and STT in the required format,
is one of the first steps in that direction.
An investor can be confident that the order he placed
through his broker was executed simply by looking at this document. This paper
is required before you can file a lawsuit or arbitration against your broker.
You should always count on your broker to provide contract notes on time.
A contract
note's primary function is:
·
Estimation of total brokerage fees
·
Capital Gains Calculation
·
In the event of a dispute with the
broker, legal evidence is required.
·
Calculation of data for the purpose
of filing a tax return
·
Cross-examination of the
transactions' authenticity
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