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

Under the SEBI (Portfolio Managers) Regulations, 2020, which of the following best describes a discretionary portfolio manager?

A discretionary portfolio manager exercises sole and absolute discretion over investing or managing the client's funds or securities in line with the agreement, without needing client approval for each trade. Non-discretionary and advisory services differ because the client approves trades or only receives advice.

  1. AOne who exercises sole and absolute discretion over investment or management of the client's portfolio as per the contractCorrect
  2. BOne who invests only after obtaining the client's prior approval for every individual transaction
  3. COne who only advises the client on which securities to buy and sell without executing any trade
  4. DOne who manages only the client's bank deposits and fixed deposits

Explanation

A discretionary portfolio manager takes investment decisions independently, in line with the portfolio management agreement, without seeking client consent for each trade. Requiring approval for each transaction describes a non-discretionary service, and pure advice without execution describes an advisory service.

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