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

Which statement about a portfolio manager's obligations on client funds under SEBI rules is correct?

Client funds and securities must be kept segregated from the portfolio manager's own funds and securities. Mixing assets, lending client money without consent or treating client holdings as the manager's own breaches fiduciary duty and SEBI rules.

  1. AClient funds may be mixed with the portfolio manager's own funds for convenience
  2. BClient funds and securities must be kept separate from the portfolio manager's own funds and securitiesCorrect
  3. CClient funds may be lent to other clients without consent
  4. DClient securities may be registered in the portfolio manager's own name as beneficial owner

Explanation

Portfolio managers must keep client money and securities segregated from their own and maintain separate client accounts. Mixing, lending without consent, or holding assets as the beneficial owner violates fiduciary duty and regulation.

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