What is Automated Customer Account Transfer Service?

Definition

The Automated Customer Account Transfer Service (ACATS) is a system designed to facilitate the transfer of securities from one trading account to another at a different brokerage firm or bank.

Origin

The National Securities Clearing Corporation (NSCC) developed the ACATS system to replace the previous manual asset transfer system with a fully automated and standardized system. This significantly reduces the cost and time of transferring assets between brokerage accounts and minimizes human errors.

Categories and Features

The main features of the ACATS system are its automation and standardization, which make the securities transfer process more efficient and reliable. It is applicable to various types of securities, including stocks, bonds, and mutual funds. The advantages of ACATS include its speed and accuracy, while a potential drawback is that it requires participating brokerage firms and banks to support the system.

Case Studies

Case 1: An investor wishes to transfer their account from Brokerage Firm A to Brokerage Firm B. Using the ACATS system, the investor's stocks and bonds were transferred within a few days, avoiding delays and errors that might occur with manual transfers. Case 2: A bank uses the ACATS system to help clients transfer their portfolios from a competitor bank, enhancing customer satisfaction and loyalty.

Common Issues

Investors using ACATS may encounter issues such as certain securities not being eligible for transfer or the participating financial institutions not supporting ACATS. Additionally, investors might misunderstand the transfer time, which typically takes a few days rather than being instantaneous.