The Securities and Exchange Board of India (Sebi) has extended the issuance of electronic contract note (ECN) as a legal document to the equity derivatives segment, a step that has been long-awaited by the broking fraternity.
Earlier, confirmation and settlement of trades in the equity segment happened through the ECN route. However, in the equity derivatives segment, this happened through the physical route.
Sebi had earlier stated that the contract note in the derivatives segment could be sent through certificate of posting, telegram, hand delivery, express delivery post, registered post or advertising it at least once in any daily newspaper published in Mumbai.
"In consultation with exchanges, it has now been decided to extend the facility of issuance of ECNs as a legal document using Straight Through Processing (STP) to the equity derivatives segment also," Sebi has said in the circular. Straight through Processing(STP) is a link program between the custodian, broker and client (in some cases). Accordingly, Sebi has enclosed a model contract note in electronic form (IFN 515 messaging format) and confirmation of ECN (IFN 598 messaging format) in the annexure of the circular that was put out this evening.
The regulator has advised the exchanges to permit issuance of ECNs, including all the standard pre-printed terms and conditions as given in the physical contract note.