Securities Transfer Agents Medallion Program

DEFINITION of Securities Transfer Agents Medallion Program

Securities Transfer Agents Medallion Program (STAMP) is a verification system used by many different institutions for guaranteeing individual signatures applied to physical certificates of securities requiring transfers. STAMP is one of three guarantee programs for this purpose, the other two being Stock Exchanges Medallion Program (SEMP) and New York Stock Exchange Medallion Signature Program (MSP). STAMP is a nonprofit entity that is a co-owner and co-operator (along with Kemark Financial Service) of the official signature guarantee service endorsed by the Securities Transfer Association.

BREAKING DOWN Securities Transfer Agents Medallion Program

The Securities and Exchange Commission (SEC) requires that a person's signature on a physical certificate of a security is verified before the security is accepted by a transfer agent. Moreover, SEC Rule 17Ad-15 stipulates that transfer agents "facilitate the equitable treatment of financial institutions which guarantee signatures of endorsers of securities; increase the efficiency of the security transfer process; and reduce the risk associated with a signature guarantor's inability to meet its obligations.

STAMP members - including commercial banks, credit unions, savings banks or broker-dealers - must have Medallion imprinting equipment and surety bond coverage to carry out the service. The Medallion imprint or stamp on a certificate indicates to a transfer agent that a signature is guaranteed by a trustworthy financial institution, which, presumably, knows its customer. A transfer agent will not accept a certificate without a signature guarantee because of the risk of loss or liability if the signature is later discovered to have been forged. Guarantors generally do not charge for the imprint service, instead offering it as a courtesy for their banking or brokerage relationship with the customer.