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

Under the SEBI portfolio managers framework, how must the securities and funds of each PMS client be handled by the portfolio manager?

The portfolio manager must keep each client's funds and securities in a separate account and keep them distinct from its own assets. PMS portfolios are individually owned and not pooled, which protects client holdings and allows customised portfolios.

  1. APooled together with other clients' assets in a single account to ease operations
  2. BKept in a separate account for each client, with client funds and securities kept distinct from the manager's ownCorrect
  3. CHeld in the portfolio manager's own name for convenience
  4. DTransferred to the distributor for safekeeping

Explanation

Regulations require segregation: each client's funds and securities are maintained in a separate account and are kept distinct from the portfolio manager's own funds and from other clients' assets. Pooling clients' assets is contrary to the PMS structure, which is unlike a mutual fund.

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