The move follows a decision taken last year to provide a uniform VWAP for trades executed across multiple platforms, and eliminate the “exchange identification” in the electronic contract note (ECN) issued by the stock exchanges

After multiple delays and extensions, stock exchanges are set to roll out a unified contract note system from May. The revised note will carry a single volume-weighted average price (VWAP) per security across exchanges for all trades executed during a settlement cycle.

The move follows a decision taken last year to provide a uniform VWAP for trades executed across multiple platforms, and eliminate the “exchange identification” in the electronic contract note (ECN) issued by the stock exchanges.

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, say, NSE and BSE, they receive separate contract notes from each exchange, each showing its own VWAP.

For example, the VWAP of shares of HDFC Bank on Wednesday was ₹1,759.05 on BSE. Meanwhile, according to the NSE, the VWAP was ₹1,761.66. “Such discrepancies have led to confusion, especially for institutional investors and custodians who require consolidated and accurate trading information. So an FPI had requested SEBI to unify the contract notes,” said a source aware of the discussions.

Implementation delays

The implementation has been delayed four times due to resistance from a few brokers, custodians and foreign portfolio investors (FPIs). Market participants had expressed concerns around potential tax implications, rounding-off errors, and operational difficulties on the part of FPIs and custodians. Many had pushed for the feature to remain optional, rather than mandatory.

However, the regulator recently directed clearing corporations and exchanges to proceed with the implementation without further extensions. “A uniform VWAP will help improve the interoperability between the two main stock exchanges, especially in case of any troubleshooting at either one of the exchanges,” said an exchange source.

As part of the implementation and to ensure a smooth transition, clearing corporations have collectively begun conducting mock trading sessions to check interface suitability of members in a controlled environment from April 7, which will continue till April 23. These test runs should help members verify interface compatibility and system readiness before going live in May.

The implementation is likely to be in phases with clearing corporations testing the cash market trades first, followed by the futures and options (F&O) market, said the exchange source.

Post implementation, clearing corporations will issue a consolidated single obligation transfer request (OTR) that combines trades across exchanges. The traditional exchange indicator field in the OTR will be replaced with a common field marked as ‘A’, meaning aggregate trades.

Published on April 10, 2025