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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to Securities Broking Operations

Which of the following best describes a contract note issued by a stock broker to a client?

A contract note is a legal document issued by the broker confirming trades executed for the client, showing details like trade time, price, quantity and brokerage. Demat holdings appear in depository statements, and contract notes are issued regardless of profit or loss.

  1. AA legal document confirming the trades executed on behalf of the client, showing details such as trade time, price, quantity and brokerageCorrect
  2. BA statement of the client's holdings in the demat account
  3. CA letter from the exchange approving the client's registration
  4. DA document issued only when the client incurs a loss

Explanation

The contract note is the broker's confirmation of trades executed for the client, with time, price, quantity and charges. Demat holdings are shown in the depository statement, and the exchange does not approve clients through contract notes. It is issued for every trade day with executed trades.

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