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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Operational Aspects of Portfolio Managers

In a PMS, securities purchased for clients are required to be held in which manner?

Client securities must be held in the client's name or in a separate account kept for that client, and must stay segregated from the portfolio manager's own assets. This protects client assets, and pooling them with proprietary holdings or leaving them with a distributor is not allowed.

  1. AIn the portfolio manager's own name and own demat account
  2. BPooled with the manager's proprietary holdings for convenience
  3. CIn the client's name or in a separate account maintained for the client, kept apart from the manager's own assetsCorrect
  4. DHeld by the distributor on behalf of clients

Explanation

Client assets must be segregated from the portfolio manager's own assets. Securities are held in the client's name or in a client-specific account. Pooling with proprietary holdings or holding with a distributor would breach this segregation requirement.

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