A contract note is a legal document that serves as a confirmation of all the trades executed during a trading day. It is a brief written announcement given by a stockbroker to a principal stating that the agent has bought or sold securities on behalf of the principal. The contract note contains details of trades executed by the broker on behalf of the client on both of the stock exchanges, i.e., NSE and BSE, for equity and derivative investments. It serves as legal proof of an individuals transactions and provides a summary of all the charges incurred. The document is password-protected to ensure the security of the sensitive information it contains. The following are the components of a contract note:
- Order and trade number
- Order and trade time
- Security name and code
- Buy or sell
- Quantity
- Price
- Brokerage
- Taxes
- Other charges
A contract note is an essential document for traders as it provides them with every sort of information they need about their trades and acts as their legal shield from fraud. Although it may appear complex at first, it is relatively simple to interpret.
