What Is a CUSIP Number and What Is Its Purpose?

The CUSIP numbers are distinctive identification numbers given to stocks and registered bonds in the US and Canada. They consist of nine alphanumeric characters. Initially implemented in 1964, CUSIPs aimed to streamline stock settlement and clearance processes. Nowadays, they play a crucial role in computerized trading record-keeping systems for managing trades and shareholder information. For foreign securities, CINS or ISIN numbers are utilized instead of CUSIPs.

Basics

In the United States and Canada, a CUSIP number is a unique nine-digit identifier given to securities, including equity, debt, and registered bonds. Its purpose is to establish a clear distinction among publicly traded securities. These numbers aid in facilitating trades and settlements by providing a consistent identifier for each security involved in a trade. To enable easy tracking of actions and activities, each trade is recorded along with its corresponding CUSIP number.

Delving Into CUSIP Numbers

A CUSIP number is a unique identifier attached to various securities issued by companies. It consists of nine digits and follows a specific structure:

• The first six characters identify the issuer.
• The seventh and eighth digits indicate the type of security.
• The ninth digit is a check digit automatically generated.

The Committee on Uniform Security Identification Procedures (CUSIP) oversees the CUSIP Number system. This system is similar to how stock symbols are assigned to publicly traded companies. CUSIP numbers play a crucial role in distinguishing and tracking securities.

CUSIP numbers play a vital role in facilitating trades and settlements by providing a reliable identifier for securities. CUSIP Global Services, overseen by FactSet Research Systems on behalf of the American Bankers Association (ABA), generates approximately 1,000 to 2,000 new identifiers daily. In 2022, FactSet acquired CUSIP Global Services from Standard & Poor's (S&P) for approximately $1.925 billion.

How to Determine the CUSIP Number

CUSIP numbers, which serve as unique identifiers for securities, can be accessed through the Municipal Securities Rulemaking Board (MSRB) via the Electronic Municipal Market Access (EMMA) system. These numbers are often found on official statements like purchase confirmations and periodic financial statements, and can also be obtained through securities dealers. In some cases, a temporary placeholder known as a dummy CUSIP is internally used by companies to identify specific securities until their official CUSIP numbers are assigned.

Differences Between CUSIP, ISI, and CINS

In addition to CUSIP, CUSIP Global Services provides other significant identifiers such as ISIN and CINS for foreign securities.

ISIN

The International Securities Identification Number (ISIN) system expands upon the CUSIP system and is used globally. United States and Canadian securities in the ISIN system have an additional two-character prefix and a final check character added to their original CUSIP. Information about the currency of the security is also included for accurate processing and record-keeping. The ISIN system has gained popularity in foreign markets, simplifying trading processes, especially for international investments.

CINS

The CUSIP International Numbering System (CINS) is an international extension of the CUSIP numbering system. CINS numbers, consisting of nine characters, are used for securities issued in 30 markets outside of North America. The first letter in a CINS represents the issuing country. For example, a CINS number like E09876AA7 represents a corporate bond with an AA credit rating issued in Spain (identified by the letter E) and offered in a foreign market.

CUSIP Numbers Examples

Here are some actual CUSIP numbers for stocks in different sectors:

• Apple: 037833100
• Microsoft: 594918104
• Alphabet: 02079K107
• Netflix: 64110L106
• Tesla: 88160R101

What CUSIP Numbers Are Needed For

CUSIP numbers play a vital role in the world of stocks and bonds. They serve as unique identifiers for listed securities and enable standardized identification, which facilitates the clearance and settlement of trading market transactions.

When you have a CUSIP number, it provides essential information about the security it represents. It tells you the exact type of security and the issuer behind it. This unique identifier helps identify whether it is a corporate bond, common stock, or another type of security.

For ordinary investors, CUSIP numbers may not have direct utility. However, they are crucial for brokerage and clearing firms. These firms rely on CUSIP numbers to ensure accurate settlement and recording of transactions.

Conclusion

A CUSIP number is a unique code used to identify securities such as stocks, bonds, and financial instruments. It was introduced in the 1960s to simplify securities identification and trade settlement. The CUSIP Service Bureau, operated by the American Bankers Association, assigns these nine-digit alphanumeric codes to each security.

Financial institutions like banks and brokerages rely on CUSIP numbers to track and identify securities within their systems, facilitating trade clearing and settlement. CUSIP numbers are commonly found on bond certificates and in databases, ensuring accurate identification of securities for trading and administrative purposes.