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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Regulatory, Governance and Ethical Aspects of Portfolio Managers

A portfolio manager wishes to offer PMS under the non-discretionary category. Which statement correctly describes the manager's role in such a service?

In non-discretionary PMS the portfolio manager advises and executes, but only after obtaining the client's prior consent for each transaction. This differs from discretionary PMS, where the manager decides independently, and from pure advisory, where the client alone executes.

  1. AThe manager decides and executes investments independently without client consent
  2. BThe manager may invest only in unlisted securities
  3. CThe manager gives investment advice and the client's prior consent is needed for each transaction, while execution is by the managerCorrect
  4. DThe manager only advises and the client must execute all trades personally

Explanation

In non-discretionary PMS, the manager provides advice and execution support, but each investment decision requires the client's prior consent. Independent decision making describes the discretionary category. Pure advice with client-only execution is an advisory service, not PMS.

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