Automated Customer Account Transfer Service (ACATS)

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You might wonder how to move your assets without selling them and losing your holdings if you're an investor looking to migrate from one brokerage business or bank to another. The Automated Customer Account Transfer Service (ACATS) is a system that, fortunately, streamlines and expedites this procedure.

ACATS is an electronic system that facilitates the transfer of securities and other investment products from one trading account to another at a different brokerage firm or bank. The system was created by the National Securities Clearing Corporation (NSCC), a division of the Depository Trust & Clearing Corporation (DTCC), a company that offers clearing and settlement services for the American financial markets.

A manual asset transfer system that was sluggish, expensive, and prone to mistakes was replaced by ACATS. Due to the complete automation and standardization of ACATS, there is less chance of human error and a reduced time and expense associated with moving assets across accounts.

How ACATS Works

The ACATS process is initiated when the new receiving firm has the client sign the appropriate transfer documents, such as an account transfer form or an ACAT form. The receiving firm sends a request to the delivering firm via the ACATS system using the client's account number and other details.

The ACATS procedure can start if the information is identical between the two organizations. After confirming the assets in the account, the delivering business notifies the receiving firm of the list of assets that qualify. The accepting or rejecting assets are then decided by the receiving entity.

The delivery firm will shift the assets to the new firm after both businesses agree on the assets to be transferred. This process typically takes three business days. The delivery process is what's happening here. Until the client's assets are settled in the new account, they cannot be accessible or tradeable at this period.

Depending on the kind and number of assets involved, the entire ACATS procedure typically takes three to six business days to complete. Incomplete or erroneous information, mismatched account types, pending trades or dividends, and non-ACATS qualifying assets are a few examples of the causes that could delay transactions, though.

Types of Assets Eligible for ACATS

ACATS can transfer most types of securities and investment products, such as:

• Stocks
• Bonds
• Cash
• Unit trusts
• Mutual funds
• Options
• Annuities
• Certificates of deposit (CDs)

However, some assets are not eligible for ACATS, such as:

• Foreign securities
• Private placements
• Limited partnerships
• Commodities
• Futures
• Precious metals
• Bankrupt securities

If you have assets in your account that are not ACATS-qualified, you might need to sell them before moving your account or keep them with your previous employer.

Benefits and Drawbacks of Using ACATS

Using ACATS has several benefits for investors who want to move their accounts from one firm to another, such as:

• Convenience: It is not necessary for you to sell your assets and then buy them back at your new company, which can result in taxes, fees, or market changes. Your roles and cost basis are still valid.
• Speed: Instead of taking weeks or months with the manual system, you can move your assets in a matter of days.
• Accuracy: Manual data input or communication errors and discrepancies can be prevented.
• Privacy: If you want to switch firms, you do not need to notify your current company or advisor in advance. To begin the transfer procedure, you just visit your new company.
  

However, using ACATS also has some drawbacks that you should be aware of, such as:

• Fees: Depending on the size and complexity of your account, some companies may charge you an ACAT fee per transfer, which can range from $50 to $200 or more. To minimize any surprises, you should consult with both companies before starting a transfer.
• Restrictions: Certain assets might not be moved via ACATS or might not be accepted by your new company. Before starting a transfer, you should verify your account holdings and speak with both companies to prevent any issues.
• Downtime: Until your assets are deposited in your new account, you might not be able to access or trade them during the delivery process. In the event that there are large market changes during this time, this may have an impact on your investing plan or performance.
  

Tips for a Smooth and Fast Account Transfer

If you decide to use ACATS to transfer your account from one firm to another, here are some tips to make the process smoother and faster:

• Review your account: Review your account holdings before starting a transfer to find any non-ACATS qualifying assets or pending transactions that can delay or complicate things. Before moving your account, you could need to liquidate or cancel it, or you might have to leave it with your previous company.
• Compare fees and services: Compare the costs and services offered by various firms before settling on one. You can discover that transferring companies is more advantageous than it is expensive, or the opposite. Additionally, see if there are any bonuses or other incentives, like waived fees, for transferring your account.
• Fill out the forms correctly: Make sure to include all necessary information on the transfer forms, including your account number, account type, social security number, and signature. Any mistakes or omissions could result in rejections or delays in the transfer procedure.
• Follow up with both firms: After starting a transfer, make sure to check in with both businesses frequently to see how it's going and to address any potential problems. Additionally, you can follow your transfer online using the ACATS system or the website of your new employer.

Conclusion

Investors can move their assets more quickly and easily using the ACATS system from one trading account to another at a different bank or brokerage house. The majority of securities and financial instruments, including stocks, bonds, cash, mutual funds, options, and annuities, can be transferred through ACATS. But other assets, such as foreign securities, commodities, futures, or precious metals, are ineligible for ACATS.

There are many advantages to using ACATS, including convenience, swiftness, accuracy, and privacy. But it also has certain disadvantages, such as costs, limitations, and downtime. You should examine your account holdings, contrast fees, and services, carefully complete the forms, and follow up with both organizations if you want your account transfer to go more quickly and smoothly.