dyga

Ultimately, the issue here is that anytime a portfolio manager is constrained from implementing the ideal strategy they would like to use due to client restrictions, the portfolio can be considered non-discretionary. The actual definition of what constitutes "discretionary" is defined on a firm-wide basis (so it could vary from firm to firm).

I think the key in the first one is "none of these constraints AUTOMATICALLY renders a portfolio non-discretionary" - just because there are constraints on the portfolio doesn't mean that the portfolio manager can't implement the investment strategy that he/she wants.