The Automated Customer Account Transfer Service (ACATS) is a system used by financial institutions in the United States to facilitate the automated and efficient transfer of securities assets between brokerage accounts. This service is particularly useful when customers want to move their investments from one brokerage firm to another without having to liquidate their holdings.

Here’s how ACATS generally works:

1. **Initiation:** The process typically begins with the customer opening an account with the receiving brokerage firm and completing the necessary transfer paperwork.

2. **Transfer Instructions:** The customer provides instructions to the receiving firm about the assets they want to transfer, including details such as the types and quantities of securities.

3. **Submission to ACATS:** The receiving firm submits the transfer request through the ACATS system. This initiates the automated process of transferring assets from the delivering (old) firm to the receiving (new) firm.

4. **Validation:** ACATS validates the transfer instructions to ensure accuracy and completeness.

5. **Notification to Delivering Firm:** The delivering firm (the old brokerage) receives notification of the transfer request. They may review the request and confirm the details.

6. **Asset Transfer:** Once the details are confirmed and validated, ACATS facilitates the transfer of assets between the delivering and receiving firms.

7. **Completion:** The process concludes with the assets appearing in the customer’s account at the receiving firm. The customer’s old account at the delivering firm is then closed.

ACATS streamlines the transfer process by automating many of the steps involved, reducing the time and paperwork traditionally associated with moving securities holdings between brokerage accounts. This system helps make it more convenient for investors to switch their accounts and consolidate their holdings without the need for selling and repurchasing securities, which could trigger tax consequences and transaction costs.

It’s important to note that ACATS is specific to the U.S. financial system, and similar systems may exist in other countries with different names or processes.