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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 best describes the portfolio manager's position on client monies and securities under the SEBI Portfolio Managers Regulations?

Client funds and securities must be kept separate from the portfolio manager's own funds and securities, with client-wise records maintained. This segregation protects investors from misuse and from claims on the manager's own assets.

  1. AClient funds may be pooled 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 if returns are shared
  4. DClient securities may be held in the portfolio manager's own name

Explanation

Regulations require segregation of client assets from the manager's own assets, with separate client-wise accounts. Pooling, inter-client lending, or holding in the manager's own name would defeat client protection and are prohibited.

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