What is the Automated Customer Account Transfer Service?

The Automated Customer Account Transfer Service (ACATS) is an electronic system that executes the transfer of assets from a trading account to another account. The transfer of assets or securities could be from a customers account to another account belonging to a brokerage firm or a bank. Through the ACATS system, financial securities can be moved from one trading account from a brokerage firm to another account. The ACATS system was developed by the National Securities Clearing Corporation (NSCC) as an electronic replacement for the old analog way of executing securities transfers. The financial securities that can be transferred through ACATS include bonds, options, stocks, mutual funds, and others.

How Does the Automated Customer Account Transfer Service Work

The ACATS is an electronic method of transferring assets, stocks, securities, bonds and mutual funds from one trading account to another. This system eliminates the need for parties to move from one brokerage firm to another in order to execute the transfer of assets. It is a convenient way through which firms transfer assets between each other, unlike the old mutual method of transferring assets.

The ACATS system standardizes the procedures of transferring assets from one trading account into another. The ACATS system authorizes a transfer when the client with the receiving account gets the approval or signature of the client on the transfer documents. The following explains clearly how the ACATS system works;

• The client transferring from his trading account to another account signs the appropriate documents.
• The receiving brokerage firm or bank receives the signed documents.
• The receiving firm sends a request to the delivering firm stating the clients account number and the transfer documents to the ACATS.
• The ACATS checks whether the information submitted by the parties match and then begins the authorization process.

Eligible Securities for ACATS

Not all types of securities are eligible for transfer on the automated customer account transfer service. All publicly traded stocks can be transferred through the ACATS channel, these include cash, exchange-traded funds, bonds, and mutual funds. Generally, taxable accounts, brokerage accounts (401(k)s, individual retirement accounts (IRAs) are the types of accounts the ACATS authorizes transfers from/to. The ACATS system also allows clients to transfer certificate of deposits (CDs) from one bank accounts to another if the banks are members of the NSCC.

Ineligible Securities for ACATS

The following securities are ineligible for transfers on the ACATS system;

• Proprietary investments and alternative investments.
• Funds traded on over the counter (OTC).
• Funds held with an insurance company such as annuities.
• Unlisted shares.