WealthManagement Magazine

NSCC Gears Up for New ACATs System

On the evening of Nov. 13, 1998, (a Friday), the National Securities Clearing Corp. (NSCC) will switch over to a new computer system for processing ACATs. This will be the first major overhaul of the ACATs system since its inception 12 years ago.The major point is greater speed, resulting in a "much faster movement of accounts" from firm to firm, says Thomas McCarthy, the NSCC managing director in

On the evening of Nov. 13, 1998, (a Friday), the National Securities Clearing Corp. (NSCC) will switch over to a new computer system for processing ACATs. This will be the first major overhaul of the ACATs system since its inception 12 years ago.

The major point is greater speed, resulting in a "much faster movement of accounts" from firm to firm, says Thomas McCarthy, the NSCC managing director in charge of the project.

Currently, when a customer requests that an account be transferred, the delivering firm has five days to verify the information in the transfer initiation form and another five to complete the actual transfer--a total of 10 days.

But once the new system is up and running on the morning of Nov. 16, the total cycle will be reduced to no more than six days and as little as three, McCarthy says.

That's because the NSCC is moving from single- to multibatch processing. Right now, all of the account transfer data that comes in during the day is put into the system just once in the evening; with the new system, it will be collected at multiple points throughout the day.

NSCC also is instituting a new procedure under which the receiving firm can demand "expedited" delivery of the account in two days, starting from the point at which the delivering firm has verified that the information in the transfer initiation form is correct. (If the firm does not ask for expedited delivery, that part of the process will still be completed in three days.)

The new system will include seemingly simple changes that will make it easier for the system to match data from the two firms on the first round, with a goal of cutting the reject rate from about 15% down to 4% or 5%, McCarthy says.

For instance, a lot of the firms include dots and dashes and spaces in their account numbers, and "those things can throw the system off," McCarthy notes. Therefore, the NSCC is moving to a straight alphanumeric code. The new ACATs form also will include space for the Social Securitynumbers of both holders of a joint account. Because the current form has space f or just one number, that can cause mismatches if one firm lists the husband as the account holder of record, while the other lists the wife, he says.

And, when a reject does occur, "We're going to suspend the process for 24 hours, to allow the requesting firm to come back into the system and clean up the data, so the process can continue," McCarthy says. "What happens right now is that the process stops and has to be started all over again."

Another big change: Partial account transfers will be brought into the new computer system, says Martin Donaldson, a vice president at the Pershing division of Donaldson, Lufkin & Jenrette. Those are now done manually, and can take anywhere from five to 30 days, but under the new system, "partials" will take no more than six days.

Bank/brokerage transfers also will begin to be automated. At the moment, the banks clear transactions through the DTC, while brokers clear through the NSCC. That means any bank-to-brokerage account transfer has to be done manually, which takes anywhere from two weeks to a month, McCarthy says.

"The banks, through DTC, have asked for an ACATs-type system, and the brokers have also encouraged the NSCC to expand its customer base [beyond the brokerage firms]," he says. Eleven banks will be included in the new ACATs system on a pilot basis. McCarthy estimates that banks account for 15% to 30% of account transfer volume.

At some point, the NSCC intends to go to an even faster system that will allow firms to input individual account transfer requests for immediate processing. "We won't be there in November, but that's where we're going," McCarthy says.

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