finra

FINRA

 

For Release:
Contacts:
Thursday, September 14, 2006
Nancy Condon (202) 728-8379
Herb Perone (202) 728-8464

 



NASD Task Force Recommends Operational, Regulatory Changes to Minimize Delays, Make Improvements in Account Transfer Process

Washington, DC — An NASD task force has issued recommendations for expediting and streamlining transfers of customer accounts from one brokerage firm to another through the Automated Customer Account Transfer System (ACATS).

The recommendations include a number of operational enhancements and regulatory measures, which are detailed in the Report of the Customer Account Transfer Task Force. The report is available online at www.nasd.com.

More than 17,000 accounts are transferred through ACATS every day. But there have been a significant number of accounts that have not been transferred in a timely way, leading to a high level of customer dissatisfaction with the process. During the last two years, more than 700 customers have submitted complaints to NASD. During the same period, brokerage firms have received more than 6,000 account transfer complaints.

In its report, the task force said the most significant cause of delays in the process is the failure of some firms to expedite account transfers, as required by SRO rules. Those rules require the firms on both sides of the transfer to "expedite and coordinate activities" related to a requested account transfer and to cooperate to "promptly resolve" any impediments to the transfer. "Some firms may not be meeting this standard," the report says.

"Customers have the right to move their accounts freely to the firms of their choice, without encountering unnecessary delays and frustration," said NASD Chairman and CEO Mary Schapiro, who chaired the 11-member task force. "Investors have the right to decide the best business location for meeting their investment services needs, and both they and the industry as a whole suffer when that right is impeded for any reason."

The task force, which was formed last fall, included operations experts from various sectors of the brokerage industry to ensure input from firms with differing business models. Also included were representatives of The Depository Trust & Clearing Corporation (DTCC) and the New York Stock Exchange (NYSE). Representatives of the Securities and Exchange Commission (SEC) and the Securities Industry Association (SIA) participated as observers.

Most transfers of customer accounts from one brokerage firm to another occur through ACATS, an electronic account system developed by the National Securities Clearing Corporation (NSCC) to automate and standardize the transfer of accounts. Assuming that there are no problems with the transfer process, an ACATS transfer should typically take about six to 10 business days.

Schapiro said NASD is committed to working with industry representatives and regulators to implement the task force's recommendations and has already met with industry and other regulatory representatives to further that effort.

Serving on the Customer Account Transfer Task Force were: William C. Alsover, Jr., Chairman, Centennial Securities Company of Grand Rapids, MI; William Bridy, President, FDS, of Merrill Lynch in Jacksonville, FL; Steven P. Callan, Associate Director, Bear Stearns Securities Corp. of Brooklyn, NY; Noland Cheng, Managing Director, Morgan Stanley in New York, NY; Bernadette Chichetti, Senior Principal Associate, New York Stock Exchange; Thomas K. McCarthy, Managing Director, The Depository Trust & Clearing Corporation in New York, NY; Ronald DeCicco, Managing Director, Customer Processing Services, Pershing LLC of Jersey City, NJ; David J. Diffenauer, Senior Vice President of Operations, A.G. Edwards & Sons, Inc. of St. Louis, MO; W. Dennis Ferguson, President, Sterne Agee Clearing of Boca Raton, FL; and, Maurisa Sommerfield, Executive Vice President of Operations, the Charles Schwab Corporation of San Francisco, CA.

NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. NASD touches virtually every aspect of the securities business - from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and member firms. For more information, please visit our Web site at www.nasd.com.