Fund Transfers Simplified
Wealth Management Services is moving along with a project to automate the transfer of retail or retirement fund holdings from a mutual fund company to a broker/dealer, and vice versa.
Recommendations on how to use two of NSCC services – ACATS-Fund/SERV and Transfer of Retirement Assets – were finalized, presented and agreed upon in November by members of the Investment Company Institute’s Transfers Working Group.
How “In Kind” Transfers Will Work
A broker/dealer or other intermediary firm will initiate a transfer request to a fund company through ACATS, which will then be translated to an ACATS-Fund/SERV record. ACATS-Fund/SERV handles both the reassignment of assets from one brokerage firm to another and the re-registration of assets on the books of a fund company.
A transfer request initiated by a fund company will be handled by Transfer of Retirement Assets (ToRA), which moves the assets and values in fund-sponsored IRA accounts from one fund to another. In this case, NSCC’s system will translate the ToRA request and pass it along to ACATS for completion.
The entire transfer process is a complicated one – numerous types of transfers involve combinations of retail and retirement assets. “Our first step will be to concentrate on ‘In kind’ transfers, where there is no liquidation of assets,” explained Barbara Simon, vice president, Product Development, Wealth Management Services. According to Simon, “In kind” transfers became the first to tackle after industry members in a survey listed them as having the highest volume of all transfers and, therefore, the most arduous to process.
“We expect to be able to decrease the time it takes to complete a transfer in two-to-10 days, versus the current four-to-eight weeks,” Simon said.
Wealth Management Services is currently working on a concept paper, which will be presented to the ICI’s Broker/Dealer Advisory Committee and Transfers Working Group in February, and expects to complete systems enhancements by the end of 2008.
ACATS Cycle Time Accelerated
Following SEC approval in October, NSCC reduced the Automated Customer Account Transfer Service (ACATS) cycle time for accounts transferring from one brokerage firm or bank to another to five days from seven. This two-day reduction comes from the lengthiest part of the process – the “request” period between the originating and receiving firms. 