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CS Professional · IFSCA - Regulations, Listing and Compliances · Fund Management Services

Nirmal Funds, a registered FME in GIFT IFSC, launches a non-retail fund and appoints a fund administrator, a custodian and a compliance officer. Which of the following best describes the allocation of responsibility under the regulations?

The FME remains accountable for the fund's regulatory compliance even after delegating tasks to administrators, custodians or others. Delegation does not shift ultimate responsibility; the FME must supervise service providers, and the compliance officer only monitors and reports rather than taking over the manager's liability.

  1. AThe custodian becomes liable for investment decisions once appointed
  2. BResponsibility for the fund's regulatory compliance transfers wholly to the compliance officer
  3. CThe administrator bears responsibility for all regulatory breaches by the FME
  4. DThe FME remains accountable for the fund's compliance even when functions are delegated to service providersCorrect

Explanation

Delegating functions to administrators, custodians or others does not discharge the FME's accountability; it must oversee them and ensure the fund meets IFSCA requirements. The compliance officer assists and monitors but does not absorb the FME's liability. A custodian does not decide investments.

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