An ACATS transfer (Automated Customer Account Transfer Service) is a standard set of “rails” used to move investments from one brokerage/custodian to another without you having to sell everything and start again. Think of it like switching banks, but for your shares, funds, ETFs, and cash.
There are two sides to every transfer:
- The receiving firm “pulls” the assets in (they initiate the request).
- The current firm “sends” the assets out (they validate what can move, then deliver what’s eligible).
Step-by-step: what usually happens
1) The new provider opens the receiving account
Before anything can move, the new account must exist and be set up correctly (same owner details, correct registrations, and the right type of account).
This matters because ACATS is designed to move assets between like-for-like registrations (for example, an individual account to an individual account in the same name).
The “pull” side: what the receiving firm does
2) The receiving firm submits the ACATS request (the “pull”)
Once you sign the relevant authority (often called a transfer authority or letter of authority), the receiving firm submits an electronic request through ACATS that basically says:
“We’re ready to receive these assets. Please transfer them to this new account.”
3) The receiving firm specifies what type of transfer it is
Typically one of these:
- Full transfer: “Move everything that can move.”
- Partial transfer: “Move these specific holdings / this amount of cash.”
They’ll also specify whether the intention is in-kind (move the actual investments) or whether anything must be sold to cash first (only where required).
The “send” side: what the current provider does
4) The current provider validates the request
The existing provider checks the request matches the account:
- Are the names and registrations correct?
- Is the account type compatible?
- Are there restrictions, holds, or special rules on any holdings?
If it’s valid, they accept the transfer into their transfer workflow.
5) The current provider checks what is transferable vs not
This is where real-world complexity appears. The sending firm reviews each holding and decides:
- Eligible to transfer via ACATS
- Not eligible to transfer via ACATS
- Eligible only if converted first (e.g., must be sold to cash, or must be re-registered another way)
Why some assets can’t be transferred “as they are”
A) Asset rules: “this security can’t go on ACATS”
Some investments are not ACATS-eligible in their current form. Common examples include:
- Certain mutual funds that aren’t available on the receiving platform
- Proprietary share classes (the fund exists, but your specific version does not)
- Some alternatives (limited partnerships, private placements)
- Certain fixed income positions or special instruments depending on settlement/market rules
B) “Walled garden” providers: “you can only hold this here”
Some platforms operate like closed ecosystems. They offer investments that are exclusive to that platform, require their own custody/administration, or can’t be held by outside brokers.
In plain terms: the new provider can’t receive something it doesn’t support or isn’t allowed to custody.
The “blotter” / reconciliation stage (and why it can look scary)
Sometimes clients notice holdings appear to “move out” of the account during the transfer process, or they look like they’ve been temporarily gathered up. This can happen because the sending firm is:
- Reconciling exactly what will move
- Temporarily limiting dealing to prevent changes mid-transfer
- Placing items into an internal transfer staging status (often described as a blotter or pending delivery list)
Airport baggage analogy
Imagine your investments are bags at an airport:
- You check in (the transfer request is submitted).
- Your bags go to the tarmac (the staging/blotter area).
- Staff sort and scan them:
- Bags that match the rules and destination flight = approved to travel
- Bags that don’t meet the rules (wrong size, restricted items, wrong destination) = pulled aside
- The eligible bags get loaded onto the plane (sent via ACATS).
- The ineligible bags are returned to you (they stay behind in the original account, or revert to the prior status).
So if you see assets temporarily “in transit” or listed as pending, it may simply be the system doing the sorting before final delivery.
What happens to assets that can’t be sent?
If a holding can’t go via ACATS, there are usually a few outcomes:
- It stays behind at the current provider (the ACATS transfer completes for everything else).
- It’s sold to cash (only if instructed/required) and the cash moves instead — note this may have tax consequences.
- It’s moved another way (a non-ACATS route such as manual transfer or re-registration), depending on the asset and platform.
Full vs partial transfers (why “full” doesn’t always mean everything)
A “full” ACATS transfer typically means:
“Move all transferable assets.”
If certain assets are blocked by platform rules, product availability, or custody restrictions, a “full transfer” may still leave behind some non-transferable positions.
How to reduce surprises
- Ask for a pre-transfer review of holdings (what can move in-kind, what can’t).
- Clarify whether the instruction is in-kind or sell-to-cash for any problem assets.
- Expect a short period of limited dealing while the transfer is in motion (to avoid mismatches).
- Don’t panic if you see pending or staging statuses — that’s often the sorting/tarmac stage before delivery.