Question

Give the meaning of 'Contract Note' and "T+2' system in the trading procedure in a stock exchange.

Hint:

A contract note ensures transparency in stock trading, while the T+2 system provides efficiency and timely settlement of transactions.

Answer 1

Contract Note:
- A contract note is a document containing details of the number of shares bought or sold, the price, the date and time of the deal, and the brokerage charges.
- Each transaction is assigned a unique order code.
- The broker issues a contract note within 24 hours after the trade has been executed.
T+2 System:
- All trading transactions are settled within 2 days.
- The pay-in day is when cash is paid or securities are delivered (before T+2 day).
- On T+2 day (the pay-out day), the exchange delivers the shares or makes payment to the broker.