What Is the 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 this fully automated and standardized one.

Key Takeaways

  • The Automated Customer Account Transfer Service can be used to transfer stocks, bonds, cash, unit trusts, mutual funds, options, and other investment products.
  • The system may be required when an investor wants to move their account from Broker Company A to Broker Company B.
  • Only NSCC-eligible members and Depository Trust Company member banks can use the ACATS system.

How the Automated Customer Account Transfer Service (ACATS) Works

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 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 usually takes three to six business days to complete.

The ACATS 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 Stock XYZ at the delivering firm, then the receiving firm receives the same amount, with the same purchase price. This makes it more convenient for clients as they do not need to liquidate their positions and then repurchase them with the new firm. Another benefit is that clients do not need to let their previous brokerage firm or advisor know beforehand. If they are unhappy with their current broker, they can simply go to a new one and start the transfer process.

Eligible Securities for ACATS

Clients can transfer all publicly traded stocks, exchange-traded funds (ETFs), cash, bonds, and most 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 those funds are held with an insurance company. To transfer the agent of record on an annuity, the client must fill out the correct form to make the change and 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 may need to be liquidated and which may not be available for repurchase through the new broker. Also, some firms may not transfer unlisted shares or financial products that trade over the counter (OTC).