The Plumbing

I’m told internally that, at the present moment, we have 24 new client onboards taking place. That’s a lot, we’re just 34 people. And one of the most frustrating, time consuming parts of about onboarding new clients in this industry is the time you have to wait for the ACATS system.

Colloquially, an “ACAT” is the transfer of a brokerage account – in kind, with all securities positions intact + cash and margin debit – between one firm and another. When I started in the industry in 1998, an ACAT took approximately seven days. And today, 23 years later, an ACAT takes approximately seven days. I don’t know why this hasn’t been sped up, given the rate of acceleration for nearly every other function and process on The Street. I’ve been told by some that it’s deliberate, to give operations people the time to correct mistakes in process. Or for salesmen to convince an outgoing client that they’ve made a mistake and should reverse the request. “Give me another chance! I’ll trade better this time!”

Either way, this week-long wait to move accounts and assets feels like a relic. ACATS is tied in with DTCC and NSCC which are trade clearing services that are funded by dues from all of the member securities firms across the country. DTCC and NSCC are now in the spotlight due to the call from Robinhood’s CEO to put an end to T+2 settlement and shift to a real-time system of settling trades (T+2 refers to Trade Date + 2 business days).

You can read more about this issue at the Wall Street Journal today if you’ve ever been curious about how the plumbing works:

Robinhood’s GameStop Debacle Spurs Calls to Modernize Stock Clearing (WSJ)


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