Account Transfer Disbursement Options

The options for accruals in the Account Transfer Disbursement—Accruals Code field are:

  • Option 2: the fund should give the accrual as cash to the customer at the delivering firm (used mainly for omnibus or house accounts).
  • Option 4: the fund should process a bucket-to-bucket transfer of the accrual to the account at the receiving firm (used for most transfers).

These options help the fund understand how the firm would like the fund to handle the following situations that can occur during the transfer:

  • When a daily accrual is part of the account transfer and the dividend was not paid during the transfer period, an accrual bucket exists as part of the account.
  • The two disbursement options for accruals tell the fund what should be done. For example, if option 4 was chosen, the fund would transfer the accrual bucket to the receiving account.
  • If fractional shares are part of the transfer, the firm can tell the fund what to do with them. For example, if option 0 was chosen, cash from the fractional shares would be sent to the customer account at the delivering broker.
  • If a dividend was paid on the day of the transfer, a residual dividend occurs. The fund will be instructed what to do with that residual. If option 3 was chosen, the cash from the residual dividend will be paid to the receiving firm.

These options help communications between the fund and the firm. If the firm feels that there are too many options, the firm can choose one or two options for all accounts and can ignore the other choices.

If the fund cannot process a particular option, the fund should not reject the transfer. In this case, the fund should choose an option that it can process, and communicate this option back to the firm in the Fund Acknowledgment record in the Fund/SERV system. The firm can see the option the fund chose in the Fund/SERV Statistics file (record type F).

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A.   If the dividend occurred during the transfer, the account transfer disbursement option eliminates the need for a residual credit transaction. In addition, if the accruals were reinvested at the receiving firm, the dividend would eventually be paid to the receiving account and would eliminate a residual transaction from the delivering firm to the receiving firm. However, a residual credit transaction would still be necessary if the dividend hit the delivering account after the transfer was processed.

A.   Participants may want to use the account's dividend option as a guide to code the transfer disbursement options. These fields apply only during the transfer period. Capital gains are not applicable in a transfer. Use the account's dividend option as a guide to choose the account transfer disbursement options.