What is ACATS (Automated Customer Account Transfer Service)?
– ACATS is an electronic system that moves securities and cash between brokerage or bank accounts at different firms. It was created by the National Securities Clearing Corporation (NSCC) to replace the old manual transfer process, making transfers faster, more standardized, and less prone to human error.
Key definitions
– Delivering firm: the current brokerage or bank holding the account being moved.
– Receiving firm: the brokerage or bank the client wants to move the account to.
– In-kind transfer: moving securities without selling them (keeps quantity and original cost basis).
– ACAT-out fee (or transfer-out fee): a charge some brokers impose to process a transfer when a customer leaves.
How an ACATS transfer works — step‑by‑step
1. Open the new account at the receiving firm and sign the transfer authorization form.
2. The receiving firm submits a transfer request (Transfer Information record) that identifies the old account and the assets to be moved.
3. The delivering firm has one business day to accept the request or reject it.
4. A review/verification period follows while both firms confirm holdings and tax status (especially for retirement accounts).
5. If accepted and eligible, assets are moved in-kind and should arrive at the receiving firm, typically within 3–6 business days.
6. The receiving firm notifies you when the transfer completes.
What ACATS transfers preserve
– Quantity of shares/units
– Original cost basis and purchase dates (so long as records are available)
– Lot-level details if the delivering firm supplies them
Securities generally eligible for ACATS
– Publicly traded stocks
– Bonds
– Exchange-traded funds (ETFs)
– Cash
– Most mutual funds (some exceptions exist—see ineligible list)
– Options and annuities (often transferable but may require extra steps)
– Certificates of deposit (CDs) if the issuing bank participates in NSCC
– Account types covered: taxable brokerage accounts, IRAs, trusts, and certain retirement plan accounts
Commonly ineligible or problematic items
– Proprietary or non-transferrable mutual funds
– Many alternative investments (private placements, hedge-fund-like products)
– Some unlisted or over‑the‑counter (OTC) securities (depends on receiving firm rules)
– Certain annuities or structured products that require issuer-level handling
Difference between ACATS and non‑ACATS (manual) transfers
– Speed: ACATS usually completes in 3–6 business days; manual transfers can take several weeks.
– Error rate: Automation reduces typos and mismatches common in manual processes.
– Scope: ACATS works only when both firms participate in the clearing network (NSCC/DTC); otherwise a manual process is required.
ACAT-out fees
– Some brokerages charge a fee to transfer accounts out. The amount varies by firm; others waive it.
– Check the delivering firm’s fee schedule before initiating a transfer.
Checklist before you start an ACATS transfer
– Confirm both firms participate in the NSCC/DTC transfer network.
– Verify which holdings are transferable (ask about proprietary funds, private investments, and OTC items).
– Request that the receiving firm obtain lot-level cost-basis data from the delivering firm.
– Ask whether the delivering firm charges an ACAT-out/transfer fee and how much.
– For retirement accounts, confirm account types and tax status match exactly (e.g., IRA-to-IRA).
– Make sure there are no restrictions on the account (pending litigation, margin calls, holds).
– Keep copies of transfer authorizations and correspondence until the transfer completes.
Small worked numeric example (illustrative only)
Scenario: You have 100 shares of XYZ at your current broker. Purchase price (cost basis) = $10. Current market price = $20. Your current broker charges a $75 ACAT-out fee.
– If you transfer in-kind via ACATS:
– You move 100 shares; original cost basis stays $10 per share.
– Transfer completes in ~3–6 business days (assuming both firms are members and no holds).
– You pay the $75 transfer fee (if the delivering broker charges it).
– Alternative—sell then move:
– Sell 100 shares at $20 → proceeds = $2,000.
– Realized gain = (20 − 10) × 100 = $1,000. That could create a taxable event.
– If a hypothetical capital gains tax of 15% applied, tax = $150 (example only).
– Net cash after tax and fee = 2,000 − 150 − any selling commissions.
Comparison: Transferring in-kind preserves the cost basis and avoids immediate tax on unrealized gains; selling before transfer locks in a taxable event. In this example, transferring in-kind plus a $75 fee would likely be cheaper than selling and paying $150 in tax (but individual tax rates and rules vary—see a tax professional).
Assumptions and caveats
– The 3–6 business day timing assumes both firms are ACATS/NSCC members and there are no special holds or mismatched account types.
– Cost-basis preservation depends on the delivering firm providing accurate lot information.
– Rules and fees change over time; check current disclosures from your brokers.
Sources
– DTCC — Automated Customer Account Transfer Service (ACATS): https://www.dtcc.com/clearing-services/automated-customer-account-transfer-service-acats
– U.S. Securities and Exchange Commission — Transferring Your Brokerage Account: Tips on Avoiding Delays: https://www.sec.gov/reportspubs/investor-publications/investorbulletin_transferringaccount.html
– FINRA — Customer Account Transfers: https://www.finra.org/rules-guidance/key-topics/customer-account-transfers
– GOV.UK — STSM131020 – CREST: Introduction: Overview of CREST: https://www.gov.uk/government/publications/crest-introduction-overview-of-crest/stsm131020-crest-introduction-overview-of-crest
Educational disclaimer
This explainer is for general education and does not constitute personalized investment, tax, or legal advice. Rules, fees, and tax outcomes vary by firm and jurisdiction; consult your brokerage, tax adviser, or legal counsel for guidance specific to your situation.