What is ACATS, and who uses it?
ACATS, the Automated Customer Account Transfer Service, is the system brokerage firms use to move a customer's account from one firm to another. It is operated by the National Securities Clearing Corp. (NSCC), a subsidiary of the Depository Trust & Clearing Corp. (DTCC), which says it launched the service in 1985 and that it handles stocks, bonds, mutual funds, options, annuities, alternative investments and cash.
The rules sit in two places. NSCC's Rule 50 and related procedures describe how the system works. FINRA Rule 11870, the self-regulator's customer account transfer rule, requires FINRA member firms to use automated clearing agency transfer services and to complete transfers within specified time frames, as the SEC summarized in its September 2025 order approving changes to ACATS. NSCC also lets the Depository Trust Co. use ACATS on behalf of participants such as banks on a voluntary basis.
In ACATS terms, the firm the customer is moving to is the receiving member, and the firm that holds the account is the carrying, or delivering, member. The receiving firm starts the process by submitting a transfer request that carries the customer's authorization. Once the receiving firm accepts the account, ACATS routes each asset to the right settlement location: NSCC's Continuous Net Settlement system or DTC for most securities, Fund/SERV for eligible mutual funds, NSCC's Insurance Processing Service for annuities and the Options Clearing Corp. for listed options, according to the SEC order.
How long does an ACATS transfer take?
FINRA Rule 11870 sets two clocks. The carrying firm must, within one business day after receiving a transfer instruction, either validate it, sending a list of all positions and money balances to be transferred, or take exception to it for reasons other than disagreements over positions or balances. It must then complete the transfer within three business days after validation. Those time frames were shortened in 2007, when FINRA cut the validation window from three business days to one to match a change in ACATS, and the rule says the time frames change whenever NSCC changes the ACATS cycle.
NSCC's own description shows the stages. Before October 2025, a transfer passed through four stages that could take up to five days: a request period on day one, a review period on days two and three in which the receiving firm reviews the asset list and accepts or rejects assets, a 'Settle Prep' day for the delivering firm to prepare delivery, and settlement. NSCC said the move to T+1 securities settlement in May 2024 made the extra preparation day unnecessary.
The SEC approved NSCC's rule change removing the Settle Prep day on Sept. 5, 2025, and DTCC confirmed Oct. 17, 2025, as the first day transfers stopped staging to that status. Trade publication FTF News reported that full transfers now take about three to four business days. During a transfer the assets stay invested, but NSCC has said trading in them may be restricted, which exposes clients to market moves they can't act on.
What is repapering, and why is it needed?
Repapering is the industry term for getting each moving client to sign new documents at the advisor's new firm. A brokerage transfer requires a signed transfer instruction from the customer, and the new firm typically needs its own account application, disclosures and, for managed accounts, a new advisory agreement. WealthManagement.com has described repapering as the most daunting task for a transitioning advisor, because each account requires its own paperwork sent to the client for signature.
Advisory agreements are the main reason a client can't simply be moved. Section 205(a)(2) of the Investment Advisers Act of 1940 bars a registered adviser from entering into an advisory contract unless the contract provides that it can't be assigned without the client's consent. An advisor who leaves for a different RIA therefore needs each client to enter a new agreement with the new firm.
Advisors often line up signatures in advance. In its 2007 filing to shorten the Rule 11870 validation window, FINRA noted that a representative planning to move may have customers sign transfer forms well before the move, and that introducing brokers worried a one-day window would leave them less time to contact customers about why they were leaving. This guide is general information, not legal or compliance advice.
When can a firm use negative consent instead of repapering?
Negative consent means telling customers their accounts will move unless they object, rather than collecting a signature from each one. FINRA addressed the practice in Regulatory Notice 26-03, issued Feb. 6, 2026. The notice says a member generally must obtain a customer's affirmative consent or instruction to transfer an account to another firm, and it describes negative consent as appropriate only in limited bulk-transfer situations, such as a change of clearing firm, or a firm exiting a line of business or being acquired.
Effective April 1, 2026, firms no longer submit draft negative consent letters to FINRA staff for a 'no objection' review, according to law firm summaries of the notice. FINRA recommended that firms generally give customers at least 30 days' notice and clearly describe how the transfer will affect them, and said the notice creates no new rules.
The notice does not open a shortcut for advisors changing firms on their own. Mintz said advisors can't use negative consent to move their personal books when switching firms, and King & Spalding cautioned that individual representatives or small groups functioning as high-volume producers should not treat the notice as a green light. For RIAs, whether consent to assign a contract can be obtained passively depends on the contract's terms, according to legal commentary published by ThinkAdvisor.
What doesn't transfer through ACATS?
Rule 11870 calls assets the receiving firm can't carry 'nontransferable.' A proprietary product of the carrying firm, such as a mutual fund only that firm offers, is deemed nontransferable unless the receiving firm agrees to accept it. The rule requires the firm to list those assets and ask the customer in writing for instructions, offering alternatives such as liquidation, with any redemption or liquidation fees spelled out; retention at the carrying firm; or transfer in the customer's name.
Alternative investments are a frequent sticking point. In Regulatory Notice 22-19, issued in August 2022, FINRA reminded firms that a new 'receiver delete' function in ACATS, which lets a receiving firm remove alternative investments from an incoming transfer, may be used only for assets that are nontransferable as Rule 11870 defines them, and only after the customer has been given a list and asked in writing how to dispose of them.
Annuities and mutual funds move through linked services. Because an annuity contract is held by the insurer, what changes is the broker-dealer of record; DTCC's ACATS/IPS service automates that change for NSCC members when a client moves, and can also update the representative of record. Fund/SERV-eligible mutual funds are re-registered through an ACATS-Fund/SERV link, according to the SEC's 2025 order. Products the new firm doesn't sell, or that a carrier or sponsor won't re-register, can still require separate paperwork or a sale.
What happens to cost basis, dividends and trailing cash?
Cost basis travels separately from the securities. Under Treasury Regulation 1.6045A-1, the firm transferring a covered security must furnish a transfer statement to the receiving broker within 15 days after the transfer settles, and a security stays a 'covered security' for basis reporting only if the receiving broker gets that statement. Clients who see missing basis on a new statement in the first weeks after a move are often seeing this lag; individual situations vary, and this is not tax advice.
Dividends, interest and other assets that arrive at the old firm after the transfer, known as residual credits, follow later. Rule 11870 requires firms that participate in a registered clearing agency with automated residual credit processing to use those facilities to send such amounts on to the new account, so trailing cash generally follows without a new request from the client.
How many clients follow an advisor to a new firm?
Not all of them. Cerulli Associates, in research with 55ip published in July 2025, estimated that advisors switching between broker-dealers typically lose about 22% of their assets, those moving from a broker-dealer to an independent firm about 18% and those moving between independent firms about 11%. Cerulli said technology that supports transitions and ongoing tax management helps firms retain assets.
What an advisor may take on the way out affects how quickly clients can be reached. Under the Protocol for Broker Recruiting, an advisor leaving a member firm for another member may take only each client's name, address, phone number, email address and account title. Morgan Stanley and UBS left the Protocol in 2017, so advisors at firms outside it depend on their contracts and applicable law.
The recruiting firm also has a disclosure duty. FINRA Rule 2273, in effect since Nov. 11, 2016, requires a firm that hires a representative to deliver a FINRA-prepared educational communication to the representative's former retail customers when it contacts them about moving assets, or when they move assets without being contacted, for three months after the representative joins. The communication lists questions for customers to consider, including whether some assets can't be transferred and what a move may cost.