

Introduction
When you trade in the stock market, one of the most important documents you receive is the contract note. It serves as legal proof of the transactions carried out on a particular trading day. Whether you’re an experienced trader or a beginner, understanding the details of contract notes in the stock market is crucial for verifying your trades, ensuring compliance, and maintaining proper financial records.
In this blog, we will explore what contract notes are, their significance, components, contract note format, how to interpret them, and how they differ from electronic contract notes.
What is a Contract Note?
A contract notes are legally binding document that records all the details of a stock market transaction executed on behalf of an investor by a broker. It is a written confirmation that provides transparency regarding the buy and sell transactions conducted on a given day.
The broker issues this document at the end of a trading session, detailing vital trade information, including the number of shares traded, price, brokerage charges, taxes, and the net amount payable or receivable.
Importance of Contract Notes in Stock Market Transactions
- Acts as proof of trade execution, ensuring there is no discrepancy.
- Helps investors verify trade details and identify any errors.
- Essential for calculating capital gains for tax purposes.
- Required for auditing and compliance with regulatory authorities.
- Provides clarity on brokerage charges and transaction costs.
Understanding a Contract Note in the Stock Market
A contract note in the stock market serves as an official record of every transaction an investor undertakes on a given day. It plays a crucial role in ensuring transparency and regulatory compliance.
Why is a Contract Note Issued by a Broker?
A contract note issued by a broker serves multiple purposes, including:
- Ensuring legal compliance with SEBI and stock exchanges.
- Providing an investor with a summary of executed trades.
- Avoiding disputes by keeping a clear and detailed transaction record.
- Helping traders and investors maintain systematic records of their stock dealings.
Contract Note Format and Key Components
Standard Contract Note Format
A stock contract follows a standardized format set by SEBI (Securities and Exchange Board of India) and the respective stock exchanges. A typical contract note format includes:

Broker Details:
This section contains the name, registration number, and contact details of the broker who issues the contract note. It ensures that the transaction is conducted by an authorized entity regulated by SEBI.
Investor Details:
The contract note must include the investor’s name, client ID, and trading account number. These details establish the ownership of the transactions recorded in the document.
Trade Details:
This section provides a breakdown of the executed trades:
- Trade Date & Time: Specifies when the transaction was executed, helping investors keep track of trading activity.
- Stock Name & Symbol: Indicates the company name and ticker symbol of the traded stock.
- Quantity of Shares Traded: Specifies the number of shares bought or sold.
- Price per Share: The agreed-upon price at which each share was transacted.
- Total Trade Value: The total cost or proceeds from the trade, calculated as the product of the quantity traded and the price per share.
Charges:
A contract notes list various charges applied to a transaction, including:
- Brokerage Charges: The fee charged by the broker for executing the trade.
- Exchange Transaction Charges: Fees levied by the stock exchange for facilitating the trade.
- Securities Transaction Tax (STT): A tax imposed by the government on securities transactions.
- Goods and Services Tax (GST): A tax applied to the brokerage and transaction charges.
- Stamp Duty: A government-imposed fee on financial transactions.
- SEBI Turnover Fees: A nominal charge collected by SEBI to regulate the securities market.
Net Payable or Receivable Amount:
The investor pays the final amount in a buy transaction or receives it in a sell transaction after deducting all charges.
Legal Disclaimer & Notes:
The contract notes include legal disclaimers, stating that the document complies with SEBI regulations and the stock exchange’s trading rules. It also includes dispute resolution mechanisms and other important regulatory disclosures.
Understanding these elements is essential to verify the accuracy of the transactions and ensure there are no errors in billing. Reviewing these details helps investors maintain transparency and safeguard their financial interests.
Electronic Contract Note (ECN) vs. Physical Contract Note
Transition to Electronic Contract Notes
With digitalization, most brokers now issue an electronic contract note (ECN) instead of a physical copy. An ECN is sent via email to investors and serves the same purpose as a paper-based contract notes.
Benefits of an Electronic Contract Note

- Faster and paperless delivery via email: Unlike physical contract notes that require printing and mailing, brokers instantly send ECNs to the investor’s registered email, ensuring quick access to trade confirmations.
- Easy storage and retrieval for future reference: Investors can conveniently store digital contract notes in cloud storage, email inboxes, or trading platforms, making retrieval easy for audits or tax purposes.
- Reduced risk of tampering or loss: Since ECNs are digitally generated and stored, they cannot be physically misplaced, altered, or tampered with, offering greater security than paper-based contract notes.
- Environmentally friendly and cost-effective: Eliminating the need for paper and postal delivery reduces environmental impact and operational costs for brokers and investors alike.
- Real-time access, allowing quicker verification: Investors can immediately review their trade confirmations, verify details, and report discrepancies if any, ensuring swift corrective action when needed.
- Regulatory Requirement: Investors who opt for an electronic contract note must provide a valid email ID and explicitly consent to receive the document in digital form
Sample Contract Note:
Contract Note Sample
Below is a sample format of a contract note issued by a broker:
Each of these elements must be checked carefully by the investor to ensure accuracy and compliance.
Stock Exchanges and Contract Notes
Role of Stock Exchanges in Contract Notes
Stock exchanges like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) have established stringent guidelines for issuing contract notes.
- Brokers registered with SEBI and stock exchanges must generate contract notes for every trade executed.
- The contract note format must align with SEBI’s standardized structure.
- Investors can verify their contract notes via exchange transaction confirmation emails.
- Any disputes related to contract notes can be escalated to stock exchanges.
How to Interpret and Use a Contract Note?
Cross-checking Trade Details
- Verify trade quantity, price, and stock name.
- Check whether brokerage charges and taxes match the agreed terms.
- Ensure net payable/receivable matches trade execution details.
Common Mistakes Investors Should Avoid
- Ignoring hidden charges in the breakdown.
- Not reporting discrepancies to the broker or stock exchange on time.
- Losing or failing to save the electronic contract notes.
- Overlooking errors in stock contract details like incorrect quantities or prices.
Open free demat account in 5 minutes
Conclusion
A contract note is more than just a trade confirmation it is an essential document that ensures transparency, compliance, and financial accuracy in your stock market transactions. Whether you receive a physical contract note or an electronic contract note, you must review its details carefully to avoid any discrepancies.
Jainam Broking Ltd. ensures that every investor receives a well-structured and compliant contract note issued by a broker, helping them stay informed and confident in their trading journey. By carefully reviewing these details, investors can prevent errors and maintain accuracy in their financial records.
Are you planning on trading in the stock market? If yes, you are at the right place!
Open a Free Demat Account with Jainam Broking Ltd. Now!
Written by Jainam Admin
1 users read this article
publish_date]