After multiple delays over the past year, the common contract note has finally gone live. All trades since June 27 will now follow a unified contract note issued by clearing corporations—making it exchange-agnostic, according to sources.

The rollout comes just days ahead of the July 1 deadline. The implementation had been delayed at least four times due to operational hurdles and pushback from the industry since its initial announcement in May 2024.

“Common contract note has gone live successfully…all of Friday’s trades followed the common contract note set up,” said a source directly aware of the development. The stock exchanges have not made a formal announcement yet.

Mock tests

The SEBI gave the go-ahead at a recent meeting, after reviewing feedback from demo tests conducted by clearing corporations since April, another source said.

A contract note is a legal document that records the summary of trades executed by an investor on a trading day — including transaction details, time, trade price, charges, and taxes.

Currently, if an investor splits trades between the two exchanges, NSE and BSE, they receive separate contract notes from each, showing its own Volume Weighted Average Price (VWAP) for the same order.

This has made it harder to track the actual average execution price of a trade and adds to investor costs and operational overhead. To avoid this, many foreign portfolio investors (FPIs) have preferred trading through a single exchange, creating an uneven playing field between the two exchanges.

Level playing field

A unified contract note will consolidate VWAPs to provide best-price execution, level the field between exchanges, and align with global best practices. This could incrementally benefit BSE, as trading volumes are currently skewed in favour of the National Stock Exchange (NSE). It may also help improve interoperability between the bourses.

Investors, especially FPIs, can now rely on smart order routing tools to get best-price execution regardless of the exchange. This is expected to enhance transparency and reduce operational friction.

A consolidated VWAP also reduces rounding errors and price mismatches. While the new format will apply only to secondary market transactions, it will be mandatory for all investor categories.

The initial delays stemmed from pushback by brokers, custodians, and some FPIs over system upgrades. There were also concerns about possible tax implications, with some market players urging SEBI to make the framework optional rather than mandatory.

Published on June 29, 2025