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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Fund Distribution and Channel Management Practices

A distributor receives a trail commission of 0.60% per annum, paid on the average assets that the distributor's clients hold in a scheme. If clients held an average of ₹5,00,000 in the scheme for a year, and the distributor shares 25% of the commission with a sub-broker, what amount does the distributor retain for that year?

The distributor retains ₹2,250. Trail commission is 0.60% of ₹5,00,000, which is ₹3,000. After paying 25% (₹750) to the sub-broker, the remaining amount is ₹2,250.

  1. A₹750
  2. B₹2,250Correct
  3. C₹3,000
  4. D₹1,500

Explanation

Total commission is 0.60% of ₹5,00,000 = ₹3,000. The sub-broker gets 25% = ₹750, so the distributor retains ₹3,000 − ₹750 = ₹2,250. ₹750 is the sub-broker's share, and ₹3,000 ignores sharing.

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