Securities Transfer Agents Medallion Program

DEFINITION of Securities Transfer Agents Medallion Program

Securities Transfer Agents Medallion Program (STAMP) is a verification system involved by a wide range of 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-administrator (alongside Kemark Financial Service) of the official signature guarantee service embraced by the Securities Transfer Association.

BREAKING DOWN Securities Transfer Agents Medallion Program

The Securities and Exchange Commission (SEC) expects that an individual's signature on a physical certificate of a security is checked before the security is accepted by a transfer agent. Besides, SEC Rule 17Ad-15 specifies that transfer agents "work with the equitable treatment of financial institutions which guarantee signatures of endorsers of securities; increase the effectiveness of the security transfer process; and reduce the risk associated with a signature underwriter's powerlessness to meet its obligations.

STAMP individuals - including commercial banks, credit unions, savings banks or [broker-dealers](/intermediary vendor) - must have Medallion engraving equipment and surety bond coverage to carry out the service. The Medallion engraving or stamp on a certificate demonstrates to a transfer agent that a signature is guaranteed by a dependable financial institution, which, probably, knows its customer. A transfer agent won't acknowledge a certificate without a signature guarantee as a result of the risk of loss or liability in the event that the signature is subsequently discovered to have been produced. Underwriters generally don't charge for the engraving service, rather offering it as a courtesy for their banking or brokerage relationship with the customer.