It is an assurance by the financial institution granting the guarantee that the signature on the transaction is genuine and that the guarantor accepts liability for any forgery.
While some banks no longer provide this service, many still do so, as do some other financial institutions such as savings and loan associations (a thrift) and credit unions.
The medallion signature guarantee program has existed since February 24, 1992, when Securities and Exchange Commission's Rule 17 Ad-15 went into effect.
[6] The medallion signature guarantee program was implemented in order to protect investors, treat financial institutions equitably, increase the efficiency of transferring securities, and reduce risk.
[7][8] Until then, financial institutions had cumbersome and inconsistent policies regarding certificates presented to a transfer agent to change ownership.