Automated customer account transfer Service (ACATS) is an automatic money transfer system that can be used for stocks, bonds, cash, options and other assets.
Only members of the National Securities Clearing Corporation (NSCC) and member banks of the American Deposit Trust and Clearing Corporation (DTCC) can use the ACATS system.
With the advantages of standardization, centralization and automation, ACATS can transfer assets in customer accounts more safely, effectively and quickly, accelerate settlement and save transaction costs.
What is ACATS?
ACATS is the abbreviation of The Automated Customer Account Transfer Service, namely automatic customer account transfer service system.
The ACATS system can realize that the contracted customers can automatically transfer the assets in the account from one brokerage company / bank to another brokerage company / bank, and it can also realize the automatic transfer of customer account assets in the sub-accounts with different attributes within the same brokerage company / bank. It is a programmed and standardized automatic operating system.
Automated customer account transfer services can be used to transfer stocks, bonds, cash, unit trusts, mutual funds, options and other investment products.
The background and working principle of ACATS system
In the late 1970s, in order to win customers' deposits, American commercial banks gradually launched and improved the autopay service account on the basis of the traditional telephone transfer service.
After the establishment of the National Securities Clearing Corporation (NSCC) in 1976, it began to provide centralized settlement, risk management, information and settlement services for the financial industry.
Subsequently, NSCC developed and launched the ACATS system, which replaced the previous manual asset transfer system with this fully automated and standardized system.
According to the system settings, as long as the customer signs and submits the corresponding asset transfer document in the new receiving company (asset transferee), the ACATS system will start and quickly send the file to the old asset depository company (asset transferor).
When the basic customer information of the asset transferor and the asset transferor matches, the asset transferor immediately registers that the customer asset has been transferred, and the asset transferee immediately registers that the customer asset has been transferred.
During this period, customers do not need to liquidate their positions and do not need to do anything in the transfer and transfer accounts to achieve seamless transfer of account assets.
Scope of application of ACATS
According to NSCC's trading rules, all qualified or certified NSCC full-service members can use the ACATS system, and bank members of the American Deposit Trust and Clearing Corporation (DTCC) can also use the ACATS system. In addition, mutual fund service members of NSCC are also eligible for limited use of the service to a certain extent.
At present, the assets that contractual clients can transfer through the ACATS system mainly include: all publicly traded stocks, exchange traded funds (ETF), bonds, cash, options and most mutual funds. In addition, the ACATS system also supports customers to transfer certificates of deposit (Certificates of Deposits) from banking institutions.
The types of accounts applicable to ACATS basically cover most types of accounts, such as taxable accounts, basic investment accounts (Brokerage Account), individual retirement accounts (IRA), retirement benefit plans 401 (k), etc. However, some annuity accounts held exclusively by insurance companies and investment accounts held by some professional institutions are not applicable to ACATS.
Benefits of ACATS
The ACATS system greatly simplifies the process of transferring client assets from one brokerage company / bank to another.
Specifically, compared with the traditional transfer procedure, the ACATS system has the following four advantages:
First, ACATS is time-efficient. Through standardization, centralization and automation, ACATS can transfer assets in customer accounts effectively and quickly.
Second, the transfer process carried out by the ACATS system fully complies with the requirements of the US Financial Regulatory Authority (FINRA) and reduces the cost of regulation.
Third, the ACATS service can support multiple transfer requirements at the same time, improving the processing capacity per unit time and reducing the transfer cost.
Fourth, ACATS has secure and reliable Internet communication module support to ensure the security of money transfer.