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

In the context of the operational aspects of investment management, which entity is responsible for safekeeping the securities and funds of a client of a portfolio manager and for settling trades on the instructions of the portfolio manager?

The custodian is responsible for safekeeping a client's securities and funds and settling trades on the portfolio manager's instructions. Registrars maintain issuer records, rating agencies assess credit quality, and exchanges provide trading platforms, so none of them performs the custody function.

  1. ACustodianCorrect
  2. BRegistrar and transfer agent
  3. CCredit rating agency
  4. DStock exchange

Explanation

A custodian holds the securities and cash belonging to the client, and settles trades as instructed by the portfolio manager. A registrar and transfer agent maintains issuer records, a rating agency assesses credit risk, and an exchange only provides the trading platform.

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