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To simplify trading operations and reduce post-trade complexities for institutional investors and market participants, the Securities and Exchange Board of India (SEBI) has made it mandatory to issue a Common Contract Note (CCN) with a single volume weighted average price (VWAP). The new system, which came into effect starting past week, aims to bring uniformity in trade reporting by consolidating trades across multiple exchanges into one harmonized document. The reform is expected to cut down operational hassles, lower costs, and support the Clearing Corporation (CC) interoperability framework introduced in 2019.
The Securities and Exchange Board of India (SEBI) has introduced a major regulatory change that promises to make life easier for institutional investors and brokers involved in multi-exchange trading. Starting this week, all trades executed by a market participant across different exchanges must be recorded and reported using a single Common Contract Note (CCN) with a unified Volume Weighted Average Price (VWAP). Advertisement
A contract note is a legal summary of all trades executed by an investor during a trading day. Previously, if an investor placed trades on more than one exchange, they would receive separate notes from each platform. This practice often led to fragmented reporting, complex reconciliation, and added regulatory compliance challenges.
Responding to these operational difficulties, SEBI engaged with market participants and stakeholders to develop a solution. Through collaborative efforts, a uniform CCN mechanism was conceptualized and introduced. This change ensures that trade information across multiple venues is aggregated and communicated through one harmonized contract note. The use of a common VWAP provides consistency and clarity in pricing across trades done on different exchanges.
In its statement, SEBI noted that the reform would streamline the post-trade communication process by eliminating the need to process multiple contract notes. The single-document format is intended to reduce the compliance burden, make reconciliation easier, and bring more consistency to trade reporting.
This initiative also supports SEBI's broader efforts under the Clearing Corporation (CC) interoperability framework, which was first introduced in 2019 to enable trades to be cleared and settled across multiple clearing corporations. The current reform fits neatly into that framework by further reducing fragmentation in back-end operations.
Previously, separate confirmations and reconciliations had to be made for each exchange adding significant operational strain for brokers and institutional investors. Now, under the revised structure, these participants can rely on one document with a consolidated view of their daily trades, improving transparency and auditability.
SEBI's move is widely seen as a long-pending measure to address inefficiencies that have existed in the system, particularly for institutions dealing with high-frequency trades across platforms.
Source PTI
5th Jun, 2025
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