Automated Customer Account Transfer Service (ACATS)

Understanding the Automated Customer Account Transfer Service (ACATS)

Navigating the world of financial services often involves the seamless transfer of assets between brokerage firms or banks. One integral tool facilitating this process is the Automated Customer Account Transfer Service (ACATS). In this comprehensive guide, we delve into the workings of ACATS, its eligibility criteria, and the securities it encompasses.

Exploring ACATS: A Comprehensive Overview

ACATS, developed by the National Securities Clearing Corporation (NSCC), streamlines the transfer of securities, including stocks, bonds, cash, mutual funds, and more, from one trading account to another. By replacing manual asset transfer systems with automation, ACATS enhances efficiency and standardization in the transfer process.

Key Takeaways

• ACATS facilitates the transfer of various investment products, including stocks, bonds, cash, and mutual funds, between brokerage firms or banks.
• Initiation of the ACATS process typically occurs when an investor seeks to move their account from one brokerage firm to another.
• Only NSCC-eligible members and Depository Trust Company member banks have access to the ACATS system.

Understanding the Operational Mechanism of ACATS

The ACATS process commences when the receiving firm initiates the transfer by obtaining necessary documentation from the client. Once submitted, the request is transmitted to the delivering firm, triggering the transfer process. Typically taking three to six business days to complete, ACATS ensures the seamless transfer of holdings between firms.

Eligible Securities for ACATS Transfer

Clients can transfer a wide array of securities through the ACATS system, including publicly traded stocks, exchange-traded funds (ETFs), cash, bonds, and most mutual funds. Additionally, certificates of deposit (CDs) from NSCC member banking institutions are eligible for transfer via ACATS, across various types of accounts such as taxable accounts, IRAs, trusts, and brokerage 401(k)s.

Ineligible Securities for ACATS Transfer

Certain securities, such as annuities, are ineligible for transfer through the ACATS system due to their association with insurance companies. Additionally, proprietary investments and unlisted shares held by brokerage firms may require liquidation and repurchase procedures. Compliance with receiving firm regulations is paramount, as some institutions may not accept certain over-the-counter (OTC) financial products for transfer.