Portfolio managers may keep all client funds in one bank a/c
Mumbai: In a move that will provide some relief to portfolio managers, market regulator SEBI
allowed them to keep the funds of all clients in a single bank account.
"...it is hereby clarified that portfolio managers may keep the funds of all clients in a bank
account maintained by the portfolio manager," the market regulator said in a circular.
Portfolio managers are the ones who take care of the investments of their clients in different
securities.
The SEBI's circular came as a clarification to its present regulations that states that portfolio
investors have to segregate each client's funds and portfolio of securities and keep them
separately from his own funds and securities.
It means that SEBI's regulations would now not bind portfolio managers to keep segregated bank
account for each client funds.
However, portfolio managers will have to keep the clients' funds separate from their own funds.
Welcoming the clarification, SMC Capital equity head Jagannadham Thunuguntla said,
"This will help the portfolio managers to smoothen their operations on day-to-day basis."
Even as portfolio managers can now keep all client fundsin a single bank account, there should
be a clear segregation of each client’s fund for record purposes, the market regulator said.
"There shall be a clear segregation of each client's fund through proper and clear maintenance of
back office records," SEBI said. Besides, the portfolio managers cannot use the funds of one
client for another client.
"Portfolio managers shall also maintain an accounting system containing separate client-wise
data for their funds and provide statement to clients for such accounts at least on monthly basis,"
the market regulator said.
Moreover, the portfolio managers should reconcile the client-wise funds with the funds in the
aforesaid bank account on a daily basis.