NISM Certifications · NISM-Series-XXI-A: Portfolio Management Services (PMS) Distributors · Role of Portfolio Managers
Which of the following is true about the custody of a PMS client's securities?
In PMS, client securities are held in the client's own name, separate from the portfolio manager's assets, and the manager must appoint an independent custodian for client funds and securities, protecting the client from misuse of assets.
- ASecurities are pooled in the portfolio manager's own name for convenience
- BSecurities must be held in the client's own name, and a custodian must be appointed for the securities and fundsCorrect
- CSecurities are held with the distributor on behalf of the client
- DSecurities are held by SEBI until the agreement ends
Explanation
Client assets are kept separate from the portfolio manager's own assets, and securities are registered in the client's name or as per the agreement, with a custodian appointed. Holding in the manager's or distributor's name would risk misuse of client assets.
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