ACATS Viewed as Key Solution to Investor Account Transfer Concerns
NSCC’s Automated Customer Account Transfer Service (ACATS) was recognized for having "greatly improved the customer account transfer process" in a report recently published by the Customer Account Transfer Task Force of the National Association of Securities Dealers (NASD).
The task force also recommended "exploring ways to expand participation in ACATS to include a wider range of indus-try participants, either on a mandatory or voluntary basis."
Solution is there
NASD issued the report in September in response to investor complaints regarding delays in the transfer of accounts between brokerage firms.
ACATS, launched in 1986, offers a ready-made solution to this increasingly high-profile investor issue. It dramatically expedites account transfers, permitting them to be conducted in an automated environment and standardizing procedures for transferring assets in investor accounts from one brokerage firm and/or bank to another.
Broker/dealers are mandated by the New York Stock Exchange and NASD to use the service, while banks use it on a voluntary basis.
Typically, a non-ACATS account transfer could take from 30 to 90 days, which leaves investor accounts in limbo for that period of time. "ACATS currently can accomplish the same transfer in about 7 days and we’re moving to shorten the cycle to 3 to 4 days, an enhancement that we expect to roll out in the second half of 2007," said Bill Kapogiannis, DTCC director, Clearance and Settlement.
Customer insight
John Cusumano, director of Operations, Private Wealth Management, Mellon Financial Corporation, said his firm has been using ACATS since February 2004.
John Cusumano, director of Operations, Private Wealth Management, Mellon Financial Corporation
"The primary benefits we have realized from ACATS are enhanced customer satisfaction and significant time savings spent tracking down assets for new accounts," said Cusumano. "The new account process is typically a client’s first experience with us, and ACATS helps ensure a seamless transition, which is invaluable. We are thrilled with the system and excited about the new ACATS interface for Trust Accounting due for implementation this year."
Making it work
The key message in the NASD report is that the industry and regulators need to develop ways to resolve current issues with the transfer process and increase participation in ACATS. Some of the recommendations include implementing stricter audits and regulations, better educating customers about the transfer process and ACATS, and standardizing certain aspects of the current transfer processes.
NSCC, which has been focused on these goals since creating ACATS, is now expanding into new market segments, adapting ACATS to make it available to the insurance and mutual fund community. "We already have an ACATS service for the insurance industry and we’ve teamed up with the Investment Company Institute [ICI] to automate transfers with mutual fund companies," said Kapogiannis, adding that NSCC is finalizing a white paper describing how ACATS will be enhanced to handle mutual fund transfers.
"The goal is to extend overall industry participation in ACATS, which assists our customers, as well as their customers, and improves the efficiency of the entire transfer process for investors," said Kapogiannis. @
[To learn more about ACATS, contact Bill Kapogiannis at bkapogiannis@dtcc.com or call 212.855.5667. To see the NASD report, visit www.nasd.com.]