Automated Customer Account Transfer Service (ACATS)
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 customer’s 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.
Automated Customer Account Transfer Service (ACATS) Works
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.
How the Automated Customer Account Transfer Service (ACATS) Works
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 client’s 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.
Reference for “Automated Customer Account Transfer Service (ACATS)”
Academics research on “Automated Customer Account Transfer Service (ACATS)”
The new cost basis rules: Preparing to comply without regulations, Bentsen, M. (2010). The new cost basis rules: Preparing to comply without regulations. Journal of Securities Operations & Custody, 2(4), 312-323. During the past year many financial services companies have been preoccupied with a very specific portion of the Emergency Economic Stabilization Act, which was passed in October 2008. This ‘bailout’ law not only set up a facility to purchase ‘distressed’ assets and make capital injections into ‘troubled’ financial institutions, it modified the current information reporting scheme to include cost basis on 1099B returns and that has left many financial institutions ‘troubled and distressed’ once again. Leading consulting organisations and well-known industry pundits have offered their views on the new cost-basis reporting requirements and have contrasted them against the current 1099B proceeds of sale reporting scheme. The course of this paper will differ from these writers as the focus will not be so much on what the new law says but rather how financial institutions are dealing with the monumental task of preparing to comply with it. At the time of writing this paper, the Internal Revenue Service (IRS) has yet to issue any preliminary regulations, let alone final ones, and the law takes effect on 1st January, 2011. Subsequent to a solicitation for responses to 36 questions the IRS posed in February 2009, communications to and from the IRS have reduced significantly and many financial services firms have begun major Project Management Programs to accommodate tracking, transferring, presenting and reporting cost-basis information while left to fill in the blanks as far as what final cost-basis regulations will look like. This paper will provide a comprehensive understanding of how some industry participants are going about preparing for the implementation of cost basis in light of the issues that are known to be presented as well as the issues that cannot be known until the regulations have been issued and finalised.
New FINRA rules aim to protect seniors and other vulnerable market participants, Brown, B. K., Anderson, J. E., Bullitt, P. G., & Cottrell, A. A. (2018). New FINRA rules aim to protect seniors and other vulnerable market participants. Journal of Investment Compliance, 19(4), 17-21. The new FINRA rule provisions create obligations for firms and also provide firms with optional additional tools to address potential financial exploitation of certain customers.
PRUDENTIAL-BACHE SECURITIES, INC., KALIL JR, S. A. M., SOLOMON, J., MOORE, J., & ACT, S. E. PRUDENTIAL-BACHE SECURITIES, INC.
New Cost Basis Reporting Law Creates Challenges for Brokers, Conlon, S. D. (2008). New Cost Basis Reporting Law Creates Challenges for Brokers. J. Tax’n Fin. Products, 7, 21.