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

Under the SEBI portfolio manager framework, what is the position on the portfolio manager's handling of client securities?

Client securities must be held in a separate account in the client's own name and kept apart from the portfolio manager's own holdings and other clients' assets. SEBI requires this segregation and client-wise accounting to protect client assets.

  1. AClient securities are to be held in a separate account in the client's own name, and not mixed with the portfolio manager's own holdingsCorrect
  2. BClient securities may be pooled in the portfolio manager's proprietary demat account for convenience
  3. CClient securities may be held in the name of the distributor
  4. DClient securities may be freely lent to other clients

Explanation

Each client's funds and securities must be kept separate from the portfolio manager's own and from other clients, with client-wise accounting. Pooling with proprietary holdings or lending to other clients would breach this segregation requirement.

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