Medallion Signature Guarantee Program and Stamp of Approval

Program Signature guarantee MedallionDefinition of Medallion Signature Guarantee
A signature guarantee is a promise. Often used in financial institutions and for banking and stock market needs, a signature guarantee is a stamp format of an authentication guarantee. A signature guarantee is different in every country. However, in the United States, a signature guarantee used for transferring securities is called a medallion signature guarantee. It proves to those involved in the transaction that the signature is genuine and that the financial institute accepts liability for any forgery.

Signature guarantees are used to protect shareholders. They prevent unauthorized transfers and thus investor losses. Furthermore, they limit the liability put on the transfer agent responsible for accepting the certificates. Selected banks and financial institutes are responsible for handing out these stamped guarantees. However, most bank branches will charge a small fee and will not give out a guarantee signature unless they know the client and he/she is a customer of that institution.

Medallion Signature Guarantee Program
There are three different ways an investor needing to transfer or sell their securities can obtain a securities guarantee. In most instances, an agent will require a medallion security guarantee before accepting that the transaction is legal. The first way is through a Securities Transfer Agents Medallion Program (STAMP). Financial institutes across the United States and Canada participate in this program. In fact, over 7,000 financial institutes are currently part of the STAMP program. Another option is to visit a financial institution that is part of the Stock Exchange Medallion Program (SEMP). These institutes are regional stock exchange member firms and clearing and trust companies. Or you can visit an institute who is a part of the New York Stock Exchange Medallion Signature Program (MSP). These participants are limited to NYSE member firms.

The Pros and Cons to the Stamp System of Signature Guarantee
Many people are frustrated by the current STAMP system, and other programs put into place when transferring securities. For those who constantly want to transfer and sell their stock, it can be annoying constantly having to get a stamp of approval. Furthermore, a medallion stamp guarantee is only available in certain countries (Canada and America) and thus, when overseas, it can be hard, if not impossible to obtain a medallion stamp guarantee, especially if you are not a customer of a financial institution. First Global Program Inc has been established to help with this overseas situation; however, keep in mind that there will be a variety of fees involved with this process.
However, without a medallion stamp guarantee, your securities are not valid. Most agents refuse to sell stock unless it has a medallion stamp guarantee as they will not be held liable for a forged security transfer. Medallion stamp guarantees are a safe way to play the market. Furthermore, the stamp of signature guarantee ensures that your securities are in the right hand and are going to the right place, as instructed by you.