What is a Medallion Signature Guarantee and How Do You Get One?

Transferring financial assets like stocks or bonds can sometimes be confusing, especially if your bank or financial institution asks you for a Medallion Signature Guarantee (MSG). This is a common request when attempting to change the registration on a securities account or when transferring a paper security certificate into a digital account. 

For example, you may inherit an account from your grandfather, titled in his name. Before you can initiate trades, take a withdrawal, or do anything else with the account, you need to open a new account in your name and transfer the securities. A Medallion Signature Guarantee verifies that you have the authority to request the transfer and that your signature is genuine. 

You may also need an MSG when gifting securities to another party, such as transferring a stock portfolio to your children or grandchildren. In addition, a financial institution may require an MSG on each signature when consolidating securities accounts — this may occur when a couple decides to transfer each of their individual accounts into a joint account.  

Since MSGs are not as common as other forms of signature verification, you may find yourself asking, "What is a Medallion Signature?" or perhaps more importantly, "Where can I get a Medallion Signature Guarantee?"

The following guide explains the details you need to know about Signature Guarantees. You'll come to understand what they are, when they are needed, and how they work. At the same time, you'll learn about the eligibility criteria and costs involved. Whether you're transferring securities to a new account, giving them as a gift, or handling the assets of a deceased loved one, understanding these details can help ensure a smooth process.

What Is a Medallion Signature Guarantee?

A Medallion Signature Guarantee is a specific type of identity verification used to authenticate signatures on security transfer paperwork. It ensures that the signature authorizing the transfer is genuine and that the person signing has the legal authority to do so. This process helps prevent fraud and protects both the financial institution and those individuals involved in the transaction.

Understanding How Medallion Signature Guarantees Work

Medallion Signature Guarantees are highly regulated and backed by specific programs and institutions. Each program has strict rules to ensure the security and authenticity of financial transactions.

Medallion Signature Guarantee Programs

MSGs are supported by three primary programs, each providing identity verification to a distinct group of financial institutions.

1. Securities Transfer Agents Medallion Program (STAMP)

STAMP is the largest of the three programs. It includes over 7,000 financial institutions in the United States and Canada, ranging from banks and credit unions to trust companies.^[1] If you're dealing with a bank or credit union for your securities transfer, the STAMP program is likely the most relevant.

2. Stock Exchanges Medallion Program (SEMP)

SEMP consists of member firms of regional stock exchanges, along with clearing and trust companies. This program focuses on facilitating the transfer of securities within these firms, providing the same verification standards as STAMP. While this is less common for individual investors, if your transactions involve firms that are part of regional stock exchanges, SEMP will be the relevant program.

3. New York Stock Exchange Medallion Signature Program (MSP)

MSP includes member firms of the New York Stock Exchange. These firms benefit from the program’s comprehensive approach to verifying signatures and authorizations. If your dealings involve NYSE member firms, MSP is the program you’ll encounter. This program is particularly relevant for high-value transactions and dealings with major financial institutions.

Eligibility Criteria

When researching how to get a Medallion Signature Guarantee, you’ll quickly learn that not every financial institution is authorized to hold a stamp. For a financial institution to provide MSGs, it must be a member of one of the recognized Medallion Signature Guarantee Programs (STAMP, SEMP, or MSP). In addition, the institutions must:

• Adhere to the program’s regulations and standards: The institution must adhere to the necessary procedures and controls to verify the identity and legal authority of individuals requesting guarantees.
• Designate trained personnel: Only specific bank officers or authorized personnel can issue MSGs. These individuals must undergo training to understand the verification process and the liability of providing the guarantees.
• Adhere to coverage limits: Institutions must be aware of the coverage limits associated with the MSGs they issue and ensure that transactions fall within them.

Since the Signature Guarantee process can be complex, consider seeking advice from a qualified source early in the process. Doing so could save you a great deal of confusion and help prevent unnecessary delays.

Coverage Limits

If a financial institution guarantees a signature that results in forgery, the institution agrees to accept liability for amounts up to the specified coverage limit. Each MSG has a maximum value it can guarantee. For example, one institution's stamp might have a coverage limit of $1,000,000, while another could cover up to $14,000,000.

If the value of your transaction exceeds the highest coverage limit available, there are several options:

• Obtain multiple guarantees: You can request multiple MSGs from different institutions to cover the total value of your transaction. Each guarantee will cover a portion of the total value, ensuring the entire amount is protected.
• Make special arrangements: Some financial institutions may offer special arrangements or higher coverage limits for specific transactions. Discuss your options with your banker or customer service representative.

Contact the transfer agent: When dealing with very high-value transactions, you might need to work directly with transfer agents or the receiving institution to ensure all necessary guarantees are in place. They can provide guidance on how to proceed and any required additional steps.

Steps To Obtain a Medallion Signature Guarantee

Understanding how to get a Medallion Signature Guarantee can help ensure a smooth process. Asking the right questions and gathering all required documentation ahead of time can ensure transactions are processed as quickly as possible. Here are the steps you’ll need to follow.

1. Gather Required Information

Prepare the necessary documents, including a valid government-issued photo ID, the completed securities transfer form, and any supporting documents related to the transaction. Depending on the type of transaction, your financial institution may also require additional paperwork. Since each transaction can vary, it's helpful to request a complete list of required documents upfront.

2. Contact Your Financial Institution

Contact your bank, credit union, or brokerage firm to inquire about their MSG services. Since not all institutions offer MSGs, it’s important to confirm availability ahead of time. As one example, some institutions only provide MSG to customers who have had a relationship with them for a minimum period of time, such as six months.

3. Schedule an Appointment

If your financial institution provides MSGs, schedule an appointment with an authorized officer. You'll need to complete the process in person rather than online.

4. Verify Your Identity

Meet with the authorized officer to verify your identity and the authenticity of the documents.

5. Document Review and Approval

The financial institution will review your request and documents. This process may take a few days, particularly for complex transactions. In most cases, reviews are completed within two to five business days.

Once your request is approved, the institution will provide the MSG by stamping the required documents. Depending on the institution's policies, you may receive the stamped documents immediately or via mail.

How Long Is a Medallion Stamp Good For?

An MSG does not technically expire. However, it is only valid for the specific transaction for which it was issued. The validity of an MSG is also contingent upon the context and timing of the transaction it supports.

A signature guarantee is intended to be used immediately or shortly after issuance. The stamp's purpose is to verify the authenticity and authority of a signature at the time of the transaction. If there is a significant delay between the issuance of the MSG and the completion of the transaction, you may need to obtain a new guarantee.

Each financial institution may also have its own policies regarding the acceptable timeframe for an MSG. Higher-value transactions may have stricter interpretations of the time limits.

How Much Does It Cost To Get a Medallion Signature Guarantee?

The cost of obtaining a Medallion Signature Guarantee can vary depending on the financial institution and your relationship with it. Many banks and credit unions offer MSGs at no cost to their account holders, particularly those who have maintained accounts with them for a certain period. For example, if you have a checking, savings, or investment account with a bank, they might provide this service free of charge as part of their customer benefits.

If you are not an existing customer of the financial institution, you may still be able to obtain an MSG for a nominal fee. The cost typically ranges from $10 to $50, depending on the institution’s policies and the complexity of the transaction. In some cases, you may need to use a third-party provider. The fees for this service are often higher, typically ranging from $50 to $100 or more.

Alternative Signature Validation Services

While there are no direct alternatives to an MSG, institutions may accept other forms of signature validation in certain situations. However, these alternatives are generally not as comprehensive as an MSG and may not be accepted for all types of transactions.

A financial institution may accept a notarized signature instead of an MSG. In this case, a notary public verifies the signer's identity and witnesses the document signing. While this can provide some assurance about the authenticity of the signature, it does not carry the same level of guarantee regarding the legal authority of the signer to transfer securities.

Each institution has its own policies regarding whether a notarized signature is an acceptable substitution. This often depends on the type of transaction, its complexity, value, and the risks involved.

Medallion Signature Guarantee for Non-U.S. Residents

Obtaining a Medallion Signature Guarantee can be more complex for non-U.S. residents.

 However, you can still obtain one through certain financial institutions. Generally, you will need to have an established account with an institution that is linked to a U.S. bank participating in one of the Medallion programs.

Non-U.S. residents must also provide specific documentation to verify their identity and the transaction's legitimacy. This typically includes a valid government-issued photo ID, proof of address, and any relevant documents related to the securities transfer. The exact requirements can vary, so check with your financial institution for a detailed list of necessary documents. Given the extra steps and potential complexities involved, some financial institutions may charge additional fees for providing MSG services to non-U.S. residents. Inquire about potential costs upfront to avoid surprises.

Final Thoughts

Medallion Signature Guarantees are commonly required when transferring securities.

Understanding how and where to obtain a guarantee can help streamline the process. Since financial institutions may vary, confirming requirements and fees ahead of time is helpful. 

Current PNC Bank customers can easily obtain a Medallion Signature Guarantee through our Document and Signature Services. Contact us today to learn more and schedule an appointment at a local bank branch.