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NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Regulatory, Governance and Ethical Aspects of Portfolio Managers

Under the SEBI (Portfolio Managers) Regulations, 2020, which statement about the tenure and exit of a client from a discretionary PMS is correct?

A PMS client may withdraw funds or terminate the agreement at any time, subject only to exit charges disclosed in the agreement. There is no regulatory lock-in period, and neither the financial year-end nor the portfolio manager's discretion restricts the exit.

  1. AThe client has a mandatory lock-in of three years
  2. BThe client may terminate the agreement at any time, with exit load only as disclosed in the agreementCorrect
  3. CThe client can exit only at the end of the financial year
  4. DThe portfolio manager alone decides the exit date

Explanation

Clients can withdraw partially or fully or terminate the agreement at any time, subject to the terms disclosed in the agreement such as exit load. No mandatory lock-in is imposed by regulation, so lock-in, year-end-only exit and manager-controlled exit are wrong.

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