CUSIP stands for “Committee on Uniform Securities Identification Procedures”. CUSIP refers to a 9-digit alphanumeric code that is assigned to all security issues approved for trading in the United States and Canada. Many companies, both in and out of the North American seek to acquire a CUSIP number of one kind or another (see below).
How CUSIP Works - Bond CUSIP
The “CUSIP” concept was originally conceived by the American Bankers Association in 1967. In 1968, the S&P (Standard & Poor’s) won a competitive bid to both operate and maintain the CUSIP Service Bureau, which issues CUSIP numbers to this day.
• Securities issuers enter into a license agreement with Standard & Poor’s in order to receive CUSIP assignments.
• CUSIP numbers are permanent and appear on the face of a security’s certificate (such as on a or a bond).
• The first six characters of a CUSIP are the issuer’s unique identification code.
• The seventh and eighth digits differentiate between fixed-income, equity, or other security classes (i.e. or bond).
• The ninth number is a check digit that is sometimes ignored or abridged.
Who Receives a CUSIP and who Does Not
Options and futures contracts do not receive CUSIPs, but nearly every other type of security does, including:
• Private-Placement Securities
• Publicly Traded Stocks and Bonds
• Government securities
• American Depository Receipts
• Municipal Debt
• Mutual Funds
• Index Options
• Certificates of Deposit
• Mortgage-backed Securities
• Commercial Paper,
• Bankers’ Acceptances
• Treasury Futures
• Syndicated Loans, and
• Public Limited Partnerships.
Aside from assigning a CUSIP to a company, the CUSIP Services Bureau also determines whether a security is eligible for a CUSIP or not, and establishes CUSIP rules and protocol. The CUSIP Services Bureau also maintains a database of information on each unique CUSIP security.
Foreign Corporations - ISINs
Issuers outside the United States and Canada do not use CUSIPs.
In fact, issuers from the outside North American typically use a nine-character CINS (CUSIP International Numbering System) or a 12-character ISIN (International Securities Identification Number).
Between 60% and 70% of securities worldwide are labeled by either CUSIPs or ISINs.
By acting as a unique identifier for each security being issued, CUSIPs help market participants avoid confusion and ensure that securities transactions are correctly matched and settled.
Additionally, a CUSIP or ISIN is also needed to ensure that dividends, interest, and other payments are properly applied.