Introduction
What Is the Automated Customer Account Transfer Service (ACATS)? The National Securities Clearing Corporation (NSCC) created the ACATS as an electronic transfer system to automate and standardize the transfer of customer accounts from one brokerage firm (or "carrying firm") to another ("receiving firm"). When ACATS cannot be used—either because the assets in the account cannot be transferred through ACATS or because one or both parties to the transfer do not engage in ACATS—customer account transfers are carried out manually. Even if the procedures for a manual transfer are the same, they can take longer.
The Automated Customer Account Transfer Service simplifies transferring money between trading accounts (ACATS). Transfers of assets or securities may be made using customer accounts at the brokerage or bank. Using the ACATS system, securities can be moved across brokerage accounts. The Automated Centralized Trading System (ACTS), developed by the National Securities Clearing Corporation (NSCC), digitized the previously paper-based process of executing securities transfers. Financial products that can be traded using ACATS include bonds, options, stocks, and mutual funds.
Examples of the ACATS in Various Contexts
Adopting such a system may be required when an investor wants to migrate from Broker Company A to Broker Company B. This system may only be used by banks who are both ACATS users and members of the Depository Trust Company or the NSCC. With the help of the Automated Customer Account Transfer Service, you can quickly transfer stocks, bonds, cash, unit trusts, mutual funds, options, and other types of investments.
How the ACATS Works?
The acquisition firm's acquisition of the client's signature on the required transfer documents signals the start of the ACATS procedure. After receiving the documents in the correct order, the firm sends a request to the sending company with the client's account number. The ACATS procedure can be initiated if the sending and receiving companies' information is consistent. The process is completed in three to six business days.
With the ACATS, switching between brokerage firms is considerably more straightforward. An accurate inventory of the supplying company's stock is sent to the receiving company. For example, one hundred shares of Stock XYZ owned by a client and held by the delivery firm would be transferred to the receiving firm at the exact purchase price. Clients don't have to deal with selling their holdings at a loss and then repurchasing them from the new firm, which makes the transfer much easier for everyone. The benefit of notifying the client's former advisor or brokerage business is also available. If they are unhappy with their current broker, they can easily switch.
Benefits
The following are some of the many advantages offered by ACATS:
Enables broker-dealer Members to comply with FINRA requirements for customer account transfers. Multiple processing iterations are permitted, along with a quick settlement option. Supports a wide range of processing options, including automatic CPU-to-CPU transfers and encrypted internet connectivity. It makes potential savings possible.
Eligible Securities for ACATS
The ACATS mechanism cannot be used to send all securities. Along with all publicly traded shares, the ACATS channel enables the transmission of exchange-traded funds and mutual funds. You can move money between accounts using the ACATS, including transfers from and to taxable accounts, brokerage accounts, 401(k)s, and IRAs. Through the ACATS system, certificate of deposit (CD) transfers between NSCC member institutions are also possible.
ACATS Fund/SERV
ACATS interacts with NSCC's Fund/SERV system to execute and settle mutual fund transactions. The integration of the ACATS and Fund/SERV systems makes it easier for two different broker-dealers to transfer mutual fund assets to one another and for a broker-dealer to transfer assets to a fund company. Mutual Fund Service Members of NSCC are entitled to use the service on a limited basis to hasten the re-registration of fund holdings when a customer's account is moved from one company to another or when a customer's mutual fund asset is moved from a broker-dealer or bank to a fund. By standardizing the processes involved in the re-registration of transferred holdings in mutual funds, ACATS can cut overhead expenses and shorten the time it takes to complete transactions and re-register assets in transferred funds. Learn about the ACATS!
Conclusion
The Automated Customer Account Transfer Service allows for transferring various investment assets, including stocks, bonds, cash, unit trusts, mutual funds, options, and other financial instruments. Adopting such a system may be required when an investor wants to migrate from Broker Company A to Broker Company B. This system may only be used by banks who are both ACATS users and members of the Depository Trust Company or the NSCC.
