Common contract note rollout: Implementation hurdles force another delay

The framework is anticipated to increase FPI participation on the BSE, where it currently accounts for only 5 per cent of trades

deal contract handshake — Sources say 11 custodians have confirmed readiness across both clearing corporations, with multiple mock tests conducted recently

2 min read Last Updated : May 01 2025 | 11:01 PM IST

Ongoing implementation challenges have pushed back the launch of the common contract note framework to July 2025. Initially unveiled in May 2024 with a planned rollout for August 2024, the timeline was previously shifted to January 2025 and then March 2025.

“Market participants and foreign portfolio investors have cited operational hurdles, including system upgrades and the strain of recent regulatory changes, as key reasons for the delay,” a source explained.

“The regulator is focused on ensuring the entire ecosystem is prepared, even though the demand for a common contract note primarily comes from one market segment,” the source added.

A contract note details transaction specifics, such as share volume, price, brokerage, and taxes. Currently, separate notes with varying pricing are issued for each exchange, leading foreign portfolio investors (FPIs) to prefer one exchange. The new framework aims to streamline this by introducing a single weighted average price (WAP) for trades across both exchanges.

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Sources say 11 custodians have confirmed readiness across both clearing corporations, with multiple mock tests conducted recently. However, some market participants question the framework’s impact, noting that FPIs, accustomed to existing processes and standardised global portfolio management software, may see little change.

Firms managing accounting and valuation for large funds have raised concerns about integration issues, including changes to file formats and data structures, and have called for a cost-benefit analysis before proceeding.

The framework is anticipated to increase FPI participation on the BSE, where FPI activity currently accounts for only 5 per cent of trades. During the BSE’s Q3FY25 earnings call on February 6, a senior official had emphasised the importance of the common contract note, stating that it’s critical for driving secondary market volumes.