1.2.5.6 Customer Account Transfers
Sometimes a customer will wish to transfer an account—some or all of the customer’s assets—from one brokerage firm to another. The customer will initiate the process by filling out a Transfer Initiation Form (TIF) and sending it to the firm to which the customer wishes to transfer. The new firm is referred to as the receiving firm because it will be receiving the new customer.
The receiving firm must immediately send a transfer request to the customer’s existing brokerage firm, known in this context as the carrying firm, sending firm, or delivering firm. The request is entered into an automated account transfer system operated by the National Securities Clearing Corporation (NSCC), the Automated Customer Account Transfer Service (ACATS), which relays it to the carrying firm. Information in the request must include the customer’s name, Social Security number, and account number.
The carrying firm has one business day to either validate or take exception to the transfer and advise the receiving firm of the reason for the exception. The two firms must promptly resolve any exceptions taken to the transfer instructions. Some of the more common reasons to take exception are listed below:
- • Account contains no transferable assets
- • Transfer would violate the firm’s credit policy
- • Receiving firm cannot identify the customer as the record owner of one or more credit assets (known as unrecognized residual credit assets; see next section)
- • Named Social Security or tax identification numbers or the account’s title or type do not match
- • Authorization for the transfer is missing or improper
- • Customer has already taken possession of the assets or they are already in transit
The carrying firm may not take exception to a transfer instruction and deny validation because of a dispute over securities positions or the balance in the account. The firms must resolve any excep