MAM versus portfolio management: defining responsibilities

MAM can allocate trading instructions across subaccounts, but the tool alone does not create a comprehensive portfolio-management agreement. Portfolio management may include broader decisions about asset mix, constraints and investor needs. First establish exactly who makes each decision in the proposed relationship.

An execution tool is not a service mandate

The MAM module describes account connections and allocation mechanics. Its name does not establish that a manager knows every investor asset or is responsible for personal liquidity needs. Owning software also proves no professional licence or legal entitlement. Review the permitted service scope against the agreement and applicable rules.

Separate decision-making from execution

A manager might choose instruments and entry times while a host enforces subaccount execution rules. An investor might retain only connection and termination decisions. These boundaries vary across arrangements. The actual authority list should show whose decision is implemented through which mechanism.

Two hypothetical service scopes

One mandate might cover only currency trading in a single account. Another might also include reviewing weights across several asset types. Connecting both to allocation software does not equalise their obligations. If an investor holds an emergency reserve outside the account, the first manager is not automatically responsible for planning that reserve without an explicit agreement.

Build a responsibility matrix

• Selecting markets, instruments, quantities and order timing.
• Setting exposure limits and enforcing subaccount constraints.
• Assessing investor needs and changed circumstances, where within scope.
• Producing reports, explaining discrepancies and correcting allocation errors.
• Holding funds, withdrawal authority and handling disconnection.

No capital custody does not mean no risk

A manager who does not hold funds may still have trading authority with substantial financial effects. Reporting access is also different from trading or transfer access. Match technical permissions with contractual authority for each role. No hidden power should become an assumed part of the service merely because it makes connection easier.

An allocation error differs from a losing decision

An instruction failing to reach a subaccount, different execution and a loss from a market decision are distinguishable issues. Investigation needs times, non-sensitive identifiers and reports from both sides; a result discrepancy alone does not prove fault. The agreement should identify the review route and initial responder without promising compensation for every loss in advance.

Keep scope changes traceable

If another service is added later, do not substitute the existing MAM label for agreement about authority, charges and reporting. Retain the version and acceptance time of changes. Managers can describe boundaries without secrets in a cooperation inquiry; investors can read execution methods alongside responsibilities when reviewing accounts. This is not a legal interpretation of a particular contract or a claim that the product already implements every control described.