Financial transactions can sometimes feel like a maze, especially when securities like stocks or bonds are involved. This is where a Medallion Signature Guarantee (MSG) comes in, helping you steer clear of fraudsters.
This post will break down the basics of an MSG, why and when you might need one, how much it’ll cost, and where you can get it in the UK.
Medallion Signature Guarantee: What’s That, Exactly?
A Medallion Signature Guarantee is like a safety net, mostly used in the United States, to prevent dodgy dealings when moving securities around. It’s not just a fancy stamp; it’s a promise that the person signing the documents is who they say they are and that they’re allowed to make this kind of transaction.
Here’s how it works: getting an MSG involves having your identification verified by the institution granting the guarantee. They will probably need you to provide a government-issued ID (e.g. a passport or a driver’s license), and proof of ownership of the securities you are transferring. This process ensures a tight level of security, minimising the risk of fraud.
This promise shows up as a special medallion stamp certification right there on the paperwork, letting everyone know that the person signing the papers has been checked out properly.
In the UK, you can get a Medallion Signature Guarantee from certain banks, stock transfer agents, and brokers. Make sure they’re part of STAMP, SEMP, or MSP. Not familiar with those terms? Here’s a breakdown:
STAMP: This stands for the Securities Transfer Agents Medallion Program. It’s a program that involves numerous financial institutions including mutual funds, banks, and brokers. Institutions that are part of the STAMP program are authorised to provide Medallion Signature Guarantees.
SEMP: This is short for Stock Exchanges Medallion Program. This program is typically limited to the member organisations of regional stock exchange markets. Like with STAMP, if a firm is a member of SEMP, it can issue Medallion Signature Guarantees.
MSP: Finally, MSP stands for the New York Stock Exchange Medallion Signature Program. This is another group of financial institutions, particularly those associated with the New York Stock Exchange (NYSE), which are authorised to give Medallion Signature Guarantees.
When seeking a Medallion Signature Guarantee in the UK, ensure that the bank, broker, or stock transfer agent you approach is a member of one of these programs – STAMP, SEMP, or MSP. This membership indicates that they have the authority to issue the medallion guarantee, thus offering you an added layer of security for your transaction.
When Do People in the UK Need a Medallion Signature Guarantee?
Although it’s a US thing, people in the UK might need a Medallion Signature Guarantee when they’re dealing with US assets. This could be when selling or transferring stocks or bonds, cashing in US shares, or sorting out the US securities of someone who’s passed away.
How Much Does a Medallion Signature Guarantee Cost?
The cost of a Medallion Signature Guarantee can change depending on the value of the transaction or the securities involved. But as a ballpark figure, in the UK, you’re looking at around £145 for transactions up to £10,000, and up to £245 for transactions up to £1,000,000.
Where Can You Get a Medallion Signature Guarantee in the UK?
Getting hold of an MSG in the UK can feel tricky because there aren’t too many places that offer this service. But you can still find some banks, stock transfer agents, and broker firms that do. You can also get a stock medallion stamp from groups that are part of the Securities Transfer Agents Medallion Program (STAMP), the Stock Exchanges Medallion Program (SEMP), or the New York Stock Exchange Medallion Signature Program (MSP).
Here, notaries can lend a helping hand. They might not be a ‘medallion notary’, but they can check your ID and go over your documents, making your MSG application easier to deal with.
What Are the Medallion Stamp Rules?
A Medallion Signature Guarantee isn’t your average notary service. The ‘medallion stamp rules’ mean the guarantor, the person or institution giving the MSG, is in trouble if there’s any forgery. So, whoever is issuing the MSG needs to have the financial strength to cover the transaction if the guarantee turns out to be fraudulent.
Getting a Medallion Signature Guarantee is like buying insurance for your securities transactions. It might feel a bit confusing, but with the right help – like from a notary – you can navigate this process with ease. Always consult with a financial advisor or solicitor to ensure a smooth and secure transaction. After all, it’s about your peace of mind and protecting your hard-earned assets.