FINRA has reminded brokers of their obligations when transferring client securities account assets from one broker to another using the Automated Client Account Transfer Service (“ACATS”). The ACATS system “automates and imposes specified obligations and execution deadlines to facilitate the transfer of accounts, in whole or in part, from one company to another”.
In a regulatory notice, FINRA said broker-dealers transferring client account assets have the option of using the “recipient removal” feature in ACATS to filter out non-transferable assets. When using the “receiver delete” function, broker-dealers must:
- expedite client requests to transfer securities account assets and coordinate with the receiving firm; and
- transfer all available assets, unless an asset is determined to be non-transferable, pursuant to FINRA Rule 11870 (“Client Account Transfer Agreements”).
Additionally, if a receiving firm uses the escrow removal feature to remove non-transferable assets, that broker is required to provide clients with a list of the assets and request written instructions regarding their disposition before designating the assets as non-transferable. .