The US Depository Trust and Clearing Corporation is to undertake a multi-year programme to overhaul and modernise its 24-year old Automated Customer Account Transfer Service (Acats), which is used by banks and brokers to transfer retail accounts across the investment industry.
When it was first introduced in 1986, Acats slashed the time taken to transfer accounts from 30 days to four. Instruments handled by Acats include equities, corporate and municipal bonds, unit investment trusts, mutual funds, options, cash and other investment products.
However, the limitations of the system were brutally exposed during the collapse of Lehman Brothers and the ensuing tremors that hit Wall Street late last year.
The Securities and Exchange Commission has since demanded a major re-engineering of the platform to provide more protection for customer assets during times of crisis and in the event of future liquiditions.
Susan Cosgrove, DTCC managing director, Equities Clearance and Settlement Group, says: "We are confident that a redesign of the Acats system will modernize its capabilities and the safeguards it provides the industry," said
She says the DTCC will present a high-level conceptual plan for the re-engineering of Acats to regulatory body Sifma by 30 September, 2009, with a development plan and implementation timeline to be in place by year-end.
While this may be a multi-year effort, says Cosgrove, DTCC will consider implementing interim steps, where possible, to ease the switch for users.