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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) Regulations, which of the following is required of a portfolio manager regarding client funds and securities?

A portfolio manager must keep clients' funds and securities segregated from its own and maintain client-wise accounts. Pooling money, holding assets in the manager's name, or lending to group entities would violate the fiduciary and segregation requirements in the regulations.

  1. AKeep clients' funds and securities separate from its own and maintain separate client-wise accountsCorrect
  2. BPool all client funds into a single account to reduce costs
  3. CHold securities in the portfolio manager's own name for ease of operations
  4. DLend client securities to group companies for additional income

Explanation

Portfolio managers must keep client funds and securities separate from their own and maintain client-wise records and accounts. Pooling in a common account, holding in own name, or lending to group companies breaches the segregation and fiduciary obligations.

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