I think I have an irrational (?) fear of making security transfers. In my bad dreams I imagine that I send ETFs from one broker to another and they are just lost on the way. And neither of the two companies feels responsible or can help me. Therefore, some things I am wondering about:
Has that ever happened?
Are those transfers as safe as for example transferring money using an IBAN within Switzerland?
What does actually happen during such a transfer from a technical perspective? Is the information on which exchange was used to buy the security always preserved?
Some brokers seem to require to register incoming transfers. When is this required or recommended? What would happen if they cannot match the transfer up?
Since transfers of securities can take hundreds of times longer than a domestic bank transfer and with way lower degree of automatisation, I’d say no. On the other hand, if something goes wrong, chances may be higher that someone competent will look into it and intervene, compared to your average bank transfer.
Why would that be of any relevance? (unlike the the date and price that you purchased these securities - though transfer of even this data isn’t always reliable from what I’ve heard/read)
I have done a lot of position transfers between US brokers, they always worked out well. My impression was that the ACATS system is somewhat straightforward.
I once encountered the following issue: I was transferring a position from IB to Charles Schwab. The user interface in Charles Schwab lets you chose between 1) “transfer some positions” or 2) “transfer entire account”. I chose 1) but IB ended up performing 2) (I found my IB account empty). I contacted IB support via phone, and they resolved the issue within one day. The transfer got cancelled and the contents of my IB account was restored.
The first time I did these transfers, I felt uneasy about them as well. So what I did back then was to do multiple smaller transfers instead of a single one.
That question is more out of interest. From what I can tell there are quite some brokers, especially those with a limited feature set, that do not support buying and then selling the same security on a different exchange. I was just curious how this would behave in conjunction with transfers.
Yes. I’ll probably transfer a smaller batch first even though this would drive up costs a bit.
Meh, it took me several weeks before making a successful ACATS transfer because IB would send the wrong SSN, or not understand the instructions, then my bank would also mess up and decline the transfer for stupid reasons… in the end, I had to try 6 or 7 times and waste weeks before it was successful. The outgoing broker also charged a substantial fee for the transfer (which they ended up waiving given the shitshow that it was)
All in all, it’s much cheaper and easier to just sell the securities and then make a wire with your bank (if you can) or use something like TransferWise to make the international wire (without currency conversion, do that on IB), and finally rebuy the securities at destination.
TransferWise always omits the reference on international wires (no matter how adamant they are that it will be there), but IB is pretty good at catching the payments and crediting them to your account anyway.
This is viable because there are no taxes on capital gains here. In other countries, selling and buying back would trigger expensive capital gains.
Transaction costs (twice) incl. broker and exchange fees, spread and possibly stamp duty can be much higher than security transfer costs for large positions. This obviously depends on the two brokers involved. Selling and buying also bears the risk of stock appreciating in value between sale and purchase. It may even have tax implications but that’s unlikely to be an issue in Switzerland.
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