Settlement, Contract Notes and Records

When a trade matches, the economic agreement is created. The market infrastructure must still complete cash and securities obligations.

This post-trade process is called clearing and settlement.

Clearing calculates the net obligations of brokers and participants and applies risk-management systems.

It determines who must deliver funds and who must deliver securities.

Settlement occurs according to the cycle and procedures currently applicable to the market and security.

Because regulations evolve, users should verify current exchange and broker guidance rather than relying permanently on an old label.

Pay-in is the delivery of required funds or securities into the settlement system.

Pay-out is the release of corresponding funds or securities to the receiving side after obligations are met.

A contract note is the formal trade confirmation issued by the broker for executed transactions.

It typically includes order and trade details, security, quantity, price, exchange, time, brokerage and applicable statutory or exchange charges.

Confirm that every trade was authorised

Verify quantity and execution price

Understand all charges

Support accounting and tax records

Provide evidence in case of dispute

The ledger records money movements in the trading relationship: deposits, withdrawals, purchase debits, sale credits, charges and adjustments.

A positive-looking app balance should be reconciled with formal statements.

The Demat statement records securities credits, debits and balances.

It should be checked against delivery purchases, sales, corporate actions and transfers.

The order book shows instructions and their status. The trade book shows completed executions.

A complete review uses both because rejected or cancelled orders do not appear as trades.

Broker reports can help organise realised and unrealised results, but the account holder remains responsible for accurate tax reporting.

Corporate actions, off-market transfers, charges and accounting methods can affect calculations. Professional tax advice may be required.

Dividends, splits, bonuses, rights and other actions can change cash or security balances.

Verify these entries using company, exchange, depository and broker records.

Official SMS or email alerts provide an independent signal of transactions and account activity.

Unexpected alerts should be investigated immediately through official contact channels.

Take screenshots or save statements

Compare order book, trade book, contract note and ledger

Raise a written ticket with the broker

Record ticket numbers and responses

Escalate through official exchange or regulatory grievance mechanisms if unresolved

Download periodic contract notes, ledgers, holding statements, tax reports and bank records.

Do not depend entirely on permanent access to one app interface.

Question: What is a contract note?

Answer: The broker-issued formal confirmation of executed trades and charges.

Question: What does a Demat statement show?

Answer: Securities credits, debits and balances.

Question: Why can the app P&L be insufficient?

Answer: It may not be the complete auditable accounting record.

Question: What should you do with an unauthorised transaction alert?

Answer: Investigate and report it immediately through official channels.

19.

You now understand the operational path from account opening to order execution and final settlement.

Before moving to chart reading, a beginner should be able to identify every account, choose a basic order type, estimate execution risk and verify all records.

Setting Up for Trading

Core ideas to retain

The broker provides access; the exchange matches orders; the depository records ownership.

A trading account manages orders and funds; a Demat account holds securities.

An order is not a trade, and a trade is not fully settled ownership.

Delivery, intraday and margin products have different operational and risk consequences.

Market orders prioritise execution; limit orders prioritise price.

Spread, depth and slippage are real costs.

Order-book quantities are live intentions, not guaranteed liquidity.

Contract notes, ledgers and Demat statements must reconcile.

Question: Where do settled delivery shares reside?

Answer: In the Demat account.

Question: What is the difference between a market and limit order?

Answer: Market prioritises execution; limit sets a price boundary.

Question: Why can a stop loss execute below its trigger?

Answer: A gap or insufficient liquidity may produce the next available price.

Question: What document formally confirms trades and charges?

Answer: The contract note.

Question: Why should a beginner avoid unnecessary leverage?

Answer: It magnifies losses and can trigger forced liquidation.

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