What Is an ACATS Transfer and How Does It Work?
Learn how ACATS simplifies moving your investment accounts between financial institutions efficiently and securely.
An ACATS transfer, or Automated Customer Account Transfer Service, is an electronic system used in the United States to move financial securities from a trading account at one institution to another. This system streamlines changing brokerage firms or financial institutions by allowing the transfer of an entire investment account, rather than requiring the sale and repurchase of individual assets. Its purpose is to simplify and secure the movement of investment portfolios.
Understanding ACATS Transfers
The ACATS system is a standardized mechanism for transferring assets between financial firms. This automated process facilitates the movement of various assets, including equities, corporate and municipal bonds, mutual funds, exchange-traded funds (ETFs), options, and cash. Individuals often use an ACATS transfer when seeking better fees, improved services, or more suitable investment options from a new financial institution.
A key benefit is the convenience of transferring an entire portfolio without liquidating holdings. This prevents potential tax implications, such as capital gains taxes, that could arise from selling assets. The system also reduces operating costs and decreases processing time compared to manual transfer methods, making it an efficient way to manage investment accounts.
Preparing for an ACATS Transfer
Before initiating an ACATS transfer, gather specific information from your current financial institution (the delivering firm) and your new institution (the receiving firm). This includes accurate account numbers, precise account types (e.g., taxable brokerage, individual retirement account), and full account registration details (e.g., individual, joint, trust). Account types and registrations must match exactly between the two firms, as discrepancies can lead to delays or rejections.
The receiving firm provides the necessary transfer forms, often called a Transfer Initiation Form (TIF). Complete all fields on this form accurately, using exact details from your current account statements. Also, verify that all assets in your delivering account are eligible for ACATS transfer, as certain asset types, such as some proprietary mutual funds or illiquid securities, may not be transferable.
Executing the ACATS Transfer
After completing the preparatory steps and filling out the transfer form, submit the Transfer Initiation Form directly to your new financial institution, the receiving firm. The receiving firm then initiates the transfer request electronically through the ACATS system, which is managed by the National Securities Clearing Corporation (NSCC).
Upon receiving the request, the delivering firm has a short period, typically three business days, to validate the instruction or raise an exception. The entire process, from initiation by the receiving firm to the completion of the asset transfer, typically takes between three to six business days.
What to Expect After Your ACATS Transfer
After an ACATS transfer is initiated, the process occurs between the delivering and receiving brokerage firms. Once the estimated transfer timeline passes, confirm the transfer’s completion by checking your new account at the receiving firm. Verify that all expected assets have arrived and are correctly reflected in your new portfolio.
Reconciling cost basis information for transferred securities is a common post-transfer activity. While ACATS aims to transfer this data automatically, delays or discrepancies can occur, particularly for older “uncovered” shares acquired before January 1, 2011. If cost basis information is missing or inaccurate, the receiving firm may require up to 15 days to obtain it from the delivering firm, or you may need to provide it manually. For delays or partial transfers, often due to non-ACATS eligible assets or unmatched account details, contact your receiving firm to resolve any issues.