The Automated Customer Account Transfer Service (ACATS) is a system that automates and standardizes procedures for the transfer of assets in a customer account from one brokerage firm and/or bank to another.
ACATS enables eligible participants to efficiently and automatically enter, review, and settle the transfer of customer accounts between each other. The service standardizes transfer procedures, reduces operating costs, and speeds transaction settlements. ACATS enables the transfers of many different types of assets, including, but not limited to, equities, corporate and municipal bonds, unit investment trusts, mutual funds, options, annuities, and cash.
When applicable, ACATS links with NSCC’s Fund/SERV system, which processes and settles mutual fund transactions, to expedite the re-registration of fund positions when a customer account moves from one firm to another, and when a customer mutual fund asset moves between a broker-dealer or bank and a fund. ACATS standardizes mutual fund re-registration procedures, reducing operating costs and the processing time of transaction settlements and re-registration of transferred fund positions.
ACATS also links with NSCC’s Insurance Processing Service (IPS) to provide insurance carriers with information necessary to re-register insurance assets that are transferred between two broker-dealers.
ACATS is a non-guaranteed service and certain transactions may be subject to reversal in the event of the default of a participant that is party to a transfer.
Who Can Use the Service
All eligible and qualified NSCC full service Members and DTC bank participants are eligible to use ACATS. Mutual Fund Service Members of NSCC are eligible to use the service on a limited basis, only as the contra-party to a transfer initiated by a broker dealer or a bank for the purpose of re-registering a mutual fund position to or from them directly.
ACATS provides the following benefits:
- Centralizes, standardizes, automates, and accelerates the transfer of customer accounts between two NSCC Members or between NSCC Members and DTC bank Participants.
- Permits broker dealer Members to comply with FINRA requirements regarding the transfer of customer accounts.
- Supports multiple processing cycles, including accelerated settlement.
- Accommodates various processing capabilities, including automated CPU-to-CPU transfers and secure internet communications.
- Creates cost saving opportunities.
How the Service Works
At a high level, a standard customer account transfer between two broker dealer Members would follow these steps:
- The receiving Member will initiate the transfer by submitting a Transfer Information (TI) record, also known as a TIF (Transfer Initiation Form) to ACATS.
- ACATS will assign a control number to the transfer, and distribute output to both the receiving Member and the delivering Member identified in the TIF, putting the requested transfer into “Request” status in the ACATS system. If ACATS rejects the transfer request (if information is missing, or the request was submitted in the wrong format, for example), only the receiving Member that initiated the transfer will be notified.
- The delivering Member must respond to the output within one business day, by either adding the assets that are subject to the transfer, or by rejecting the transfer. If the deliverer does not respond, ACATS will add information relating to the transfer to reporting distributed to FINRA .
- After the delivering Member adds the assets that are subject to the transfer, both the receiver and deliverer Members have an opportunity to review the list of assets in the account. The ACATS transfer will remain in this “Review” status which can last the remainder of the day that the deliverer added assets and through the next business day. During this review period, the delivering Member can add, delete, or modify an asset or assets listed in the transfer. If the deliverer takes any of these actions, ACATS updates the transfer to “Review Adjust-Deliverer” status and adds an additional business day for the parties to review the transfer.
- If the transfer contains mutual funds or insurance assets, the receiving Member must submit the appropriate mutual fund and insurance re-registration instructions.
- Once the review period is complete, and the receiving Member has added any applicable re-registration instructions, ACATS will stage the transfer for settlement, and sets the account to “Settle Prep” status. During this period, which lasts for one business day, the receiver and deliverer can no longer update the transfer.
At this point, ACATS will issue a settlement report/file to both the deliverer and receiver to inform them of the assets settling in the transfer. ACATS will also send the settling assets to their eligible settlement interfaces, such as CNS, DTC, or Fund/SERV.
- When the transfer settles, it is set to “Settle Close” status in the ACATS system. If a broker-to-broker transfer includes non-CNS eligible securities, the delivering Member will be debited the market value of the asset and the receiving Member will be credited the market value of the asset through NSCC’s money settlement. These charges create an incentive for the delivering Member to deliver the asset and allow the receiving Member to record the customer on its books on ACATS settlement date, insulating the customer from risks related to the settlement process.
When cash assets are transferred in a broker-to-broker transfer, that amount will be debited and credited through NSCC money settlement, and netted with any applicable incentive charges described above. When cash assets are transferred in an ACATS transfer where one of the counterparties is a bank, that asset settles through a Security Payment Order (SPO) charge at DTC.
For More Information
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