Automated Customer Account Transfer Service - ACATS

What is an 'Automated Customer Account Transfer Service - ACATS'

The Automated Customer Account Transfer Service (ACATS) is a system that facilitates the transfer of securities from one trading account to another at a different brokerage firm or bank. The National Securities Clearing Corporation (NSCC) developed the ACATS system, replacing the previous manual asset transfer system with a fully automated and standardized one.

BREAKING DOWN 'Automated Customer Account Transfer Service - ACATS'

Stocks, bonds, cash, unit trusts, mutual funds, options and other investment products can be transferred via the ACATS system. Only NSCC-eligible members and Depository Trust Company member banks can use the ACATS system. This is the system that processes automated customer account transfers (ACAT).

ACATS System Process

The ACATS system is initiated when the new receiving firm has the client sign the appropriate transfer documents. Once the document is received in good order, the receiving firm submits a request using the client's account number and personal information and sends it to the delivering firm. If the information matches between both the delivering firm and the receiving firm, the ACATS process can begin. The process takes four to six business days to complete.

The ACATS process simplifies the process of moving from one brokerage firm to another. The delivering firm transfers the exact holdings to the receiving firm. For example, if the client had 100 shares of Coca-Cola at the delivering firm, then the receiving firm receives the same amount. This makes it more convenient for clients, so they do not need to liquidate and repurchase to transfer. Another benefit for transferring clients is that they do not need to let their previous brokerage firm or advisor know beforehand.

Eligible Securities for ACATS

Clients can transfer all publicly traded stocks, exchange-traded funds (ETFs), cash, bonds and mutual funds through the ACATS system. ACATS can also transfer certificates of deposit (CDs) from banking institutions through the ACATS system, as long as it is a member of the NSCC. ACATS also works on all types of accounts, such as taxable accounts, individual retirement accounts (IRAs), trusts and brokerage 401(k)s.

Ineligible Securities for ACATS

There are several types of securities that cannot go through the ACATS system. Annuities cannot transfer through the system, as the funds are held directly through the insurance company. To transfer the agent of record on an annuity, the client must fill out the correct form to make the change will initiate the process.

Other ineligible securities depend on the regulations of the receiving brokerage firm or bank. Many institutions have proprietary investments, such as mutual funds and alternative investments that need to be liquidated prior to transferring. Also, many firms do not like to receive unlisted over-the-counter (OTC) or penny stocks.

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