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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Operational Aspects of Investment Management

In the context of investment operations, which of the following best describes the role of a custodian for a client's securities portfolio?

A custodian safeguards a client's securities and handles settlement of trades and related servicing such as collecting corporate action benefits. It does not recommend investments, assign credit ratings or set exchange brokerage rates, which belong to advisers, rating agencies and exchanges.

  1. ASafekeeping of securities and settlement of trades on behalf of the clientCorrect
  2. BRecommending which securities the client should buy
  3. CRating the credit quality of debt securities in the portfolio
  4. DSetting the brokerage rates charged by stock exchanges

Explanation

A custodian holds securities in safekeeping and handles settlement, corporate action collection and related record keeping. It does not give investment advice, rate securities or fix exchange charges, so the other options describe different functions.

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