The National Securities Clearing Corp. (NSCC) claims its overhauled ACATS system, which went into operation Feb. 22, has cut account transfer times down to as little as three days.
The updated version of the Automated Customer Account Transfer Service (ACATS) reduces standard account transfer turnaround time from seven business days to six business days, the NSCC says. And a special account acceleration feature can cut the time down to as little as three days.
Steve Letzler, NSCC director of communications, explains that the old system allocated three days for new application review, two days for a pending period, one day for settlement preparation and another day for settlement close--seven days altogether.
The new system shaves a day off of the pending period, and the accelerated mode speeds things up even faster, Letzler says.
Another new ACATS feature called 24-hour reject gives the delivering firm an opportunity to address errors that cause rejects, such as a bad Social Security number or account number, without actually rejecting the application.
[A transfer] will remain pending for 24 hours, says Bear Stearns Associate Director Steve Callan. The good thing about that is that it doesnt fall off the system, so you dont have to start the process all over again.
The NSCC also made a number of alterations to its Fund/Serv link, which electronically re-registers mutual fund assets when a client transfers to a new broker/dealer or bank. The new Fund/Serv link seems to be working well, Callan says. The fund companies seem to be happy with it and the positions are re-registering and moving quicker through the system.
Customer statements in April will reflect changes in the ACATS process. Roughly a dozen banks are participating as volunteers, alongside the broker/dealers required to participate. While Callan says there were some user educational glitches when the system switched over in February, the technology operated perfectly.
The NSCC originally planned to relaunch ACATS in November 1998, but the release date was delayed until January 1999 and then to February because of problems with participating firms and outside contractors.
The new accelerated ACATS process, in a best-case scenario, goes something like this:
1) The request reaches the delivering firm in the morning.
2) The delivering firm responds with a list of assets by 2 p.m.
3) The receiving firm elects to accelerate by 4 p.m.
4) Settlement preparation and close take two more days. Total time: three days.
In practice, the delivering firm generally doesnt respond the same day, but responds the following day, at which point the receiving firm elects to accelerate, and the process takes four days, says Steve Letzler, NSCC director of communications.
