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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Market Participants in the Securities Market

Which market participant acts as the legal owner of the assets of a mutual fund scheme on behalf of unit holders and holds them in custody through a separate arrangement?

The trustee is the correct answer. Trustees hold mutual fund scheme assets on behalf of unit holders and supervise the asset management company. The AMC only manages the investments, the RTA maintains records, and the sponsor merely sets up the fund.

  1. AAsset management company
  2. BTrusteeCorrect
  3. CRegistrar and transfer agent
  4. DSponsor

Explanation

In the Indian mutual fund structure, the trust holds the scheme assets for the benefit of unit holders and the trustees oversee the AMC. The AMC manages investments but does not own the assets. The RTA only handles unit records and transactions, and the sponsor only establishes the trust.

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