Is There A Demand for Medallion Guarantees In the UK?
Investing in securities is a complex process, especially since 55.9% of the 2021 global stock market value is in the United States and there are special provisions which apply when foreign investors sell shares in the US market. Investors may need a Medallion Signature Guarantee to transfer the ownership of shares, an unfamiliar requirement to investors outside of North America. In addition, there might also be IRS requirements to be fulfilled.
In 2019, 40% of US-listed stocks were owned by foreign investors and a separate 2017 report found that 15% of all inbound foreign direct investments (FDI) in the US originated from the UK. Compounding these figures, approximately 3.5% of the global stock market, listed in the US, is owned by investors in the UK and therefore may need a Medallion Signature Guarantee when transferring ownership.
What is a Medallion Signature Guarantee?
A Medallion Signature Guarantee, also known as a Medallion Stamp, is a unique certification stamp introduced by the Securities and Exchange Commission (SEC) in 1992. It guarantees the authenticity of an investor’s signature. The Medallion Signature Guarantee Programme protects shareholders by making it harder to forge signatures for unauthorised, fraudulent transfers. It also limits the liability of the transfer agent accepting the certificates by providing a guarantee on the legitimacy of stocks and shares to be sold or transferred.
Very few organisations outside of North America are authorised to issue Medallion Signature Guarantees, which makes acquiring one potentially difficult.
Do All Investors Need Medallion Signature Guarantees?
The short answer is no. If investors wish to sell or transfer shares with a value under $10,000, they can opt for a Medallion Waiver instead. However, Medallion Waivers are not part of an official program, and not all Transfer Agents offer the Medallion Waiver due to the associated risk of irreversible losses.
Unlike the Medallion Signature Guarantee Program, Medallion Waivers leaves the Transfer Agent unprotected and exposed to fraudulent transfer risks.
How can Share Data Help?
Since 2014, Share Data is one of the few accredited companies in the UK capable of issuing Medallion Signature Guarantees. Share Data does not need to act under a Power of Attorney to obtain a Medallion Signature Guarantee stamp for the sale or transfer of US or Canadian shares.
Contact us to find out how Share Data’s team can help.