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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Other Services Provided by Brokers

A broker's client has traded in the cash segment and the broker sends a contract note. Which statement about the contract note is correct under exchange and SEBI requirements?

A broker must issue a contract note within 24 hours of trade execution, in the prescribed format, showing the trade details and with brokerage and other charges separately stated. Monthly consolidation, verbal waivers or small trade values do not remove this obligation.

  1. AIt must be issued to the client within 24 hours of execution of the trade, containing trade details and brokerage separately shownCorrect
  2. BIt need only be issued at month end with a consolidated figure
  3. CIt may omit the brokerage if the client has verbally agreed
  4. DIt need not be issued for trades under Rs 1 lakh

Explanation

Contract notes must be issued within 24 hours of the execution of trades, in the prescribed form, with brokerage and other charges shown separately. Month-end, verbal agreement and value thresholds are not valid exceptions.

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