What is a Medallion Signature Guarantee?

What is a Medallion Signature Guarantee?

A medallion signature guarantee is one of several special certification stamps that guarantees a signature that authorizes a transfer of securities is authentic. Parties will generally require a medallion signature guarantee when an owner wants to sell or transfer securities, such as stocks or bonds, held in physical certificate form.

If an owner holds securities through a broker, they will not need to obtain a signature guarantee to sell or transfer the securities.

How Medallion Signature Guarantee Works

An institution providing a medallion signature guarantee must be a participant in one of the three Medallion programs – i.e., the New York Stock Exchange Medallion Signature Program, Securities Transfer Agents Medallion Program, and the Stock Exchange Medallion Program.

The Securities and Exchange Commission (SEC) regulations determine eligible providers of a medallion signature guarantee. The stamp can guarantee proper endorsements in transactions involving mutual stocks, funds, bonds and savings bonds, warrants and other securities, and unit investment trusts.

The institutions offering the stamp may charge a small fee to its customers. A medallion signature guarantee stamp cannot be given to individuals outside the U.S. Some institutions may accept the U.S. embassy seal if notified of the substitutions in advance. Several endorsing institutions outside the U.S. with a correspondence relationship with a U.S. bank issue their existing customers with a medallion signature guarantee stamp.

 

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