Page 6 - Lesson Note 3

6. After the trade has been executed, within 24 hours the broker issues a Contract Note.

This note contains details of the number of shares bought or sold, the price, the date and

time of deal, and the brokerage charges. This is an important document as it is legally

enforceable and helps to settle disputes/claims between the investor and the broker. A
Unique Order Code number is assigned to each transaction by the stock exchange and is

printed on the contract note.

7. Now, the investor has to deliver the shares sold or pay cash for the shares bought. This

should be done immediately after receiving the contract note or before the day when the
broker shall make payment or delivery of shares to the exchange. This is called the pay-in

day.

8. Cash is paid or securities are delivered on pay-in day, which is before the T+2 day as the

deal has to be settled and finalized on the T+2 day. The settlement cycle is on T+2 day on a

rolling settlement basis, w.e.f. 1 April 2003.

9. On the T+2 day, the exchange will deliver the share or make payment to the other broker.

This is called the pay-out day. The broker then has to make payment to the investor within
24 hours of the payout day since he has already received payment from the exchange.

10. The broker can make delivery of shares in demat form directly to the investor’s demat

account. The investor has to give details of his demat account and instruct his depository

participant to take delivery of securities directly in his beneficial owner account.