What Is a CUSIP Number?
Let me explain what a CUSIP number is—it's a series of letters and numbers that identifies specific securities to make trading and settlement straightforward. You see, CUSIP numbers create a clear distinction between financial securities traded on public markets, including equities, debts, derivatives, and more. They provide a constant identifier that helps distinguish securities during trades, and each trade along with its CUSIP is recorded to track actions and activities effectively.
Key Takeaways
Here's what you need to know: A CUSIP number consists of nine letters and numbers. It was first introduced in 1964 to simplify the settlement and clearance of stocks. Today, they're mainly used in computerized trading record-keeping systems for trades and shareholder records. For foreign securities, you'll encounter CINS or ISIN numbers instead of a CUSIP.
How CUSIP Numbers Work
Pronounced as 'Q-sip,' CUSIP stands for the Committee on Uniform Security Identification Procedures, which oversees the whole system. Just like stock symbols for publicly traded companies, a CUSIP is a unique identifier for equities, debts, and other securities issued by a company—think of it as a serial number made up of nine digits.
The structure breaks down like this: The first six alphanumeric characters form the base or CUSIP-6, identifying the issuer. The seventh and eighth digits specify the type of security. The ninth is a check digit that's automatically generated.
These numbers cover a range of securities, from common stock and corporate bonds to hedge funds, ETFs, mutual funds, REITs, and even derivatives like credit derivatives or equity-linked notes. By offering a consistent identifier, CUSIP numbers facilitate trades and settlements. CUSIP Global Services issues 1,000 to 2,000 new ones daily, managed by FactSet Research Systems on behalf of the American Bankers Association—FactSet bought it from Standard & Poor's in 2022 for about $1.925 billion.
As of September 2022, there are over 12.8 million U.S. and Canadian issues in the CUSIP system.
How to Locate a CUSIP Number
You can find CUSIP numbers publicly through the Municipal Securities Rulemaking Board via their Electronic Municipal Market Access (EMMA) system. They're also often listed on official statements like purchase confirmations or periodic financial statements, or you can get them from securities dealers.
A quick note: A dummy CUSIP is a temporary nine-character placeholder used internally by companies until the official one is assigned.
CUSIP vs. ISIN vs. CINS
Beyond CUSIP, there are other identifiers like ISIN and CINS. The International Securities Identification Number (ISIN) expands on CUSIP for international use, adding a two-character prefix and a final check character to U.S. and Canadian securities, plus currency information for proper processing. This creates an international clearance system, gaining traction in foreign markets to simplify trading, especially for international investing.
Then there's the CUSIP International Numbering System (CINS), a nine-character code for securities in 30 markets outside North America, where the first letter indicates the issuing country—for example, E09876AA7 for an AA-rated corporate bond from Spain (E for Spain) offered abroad.
Examples of CUSIP Numbers
To give you real examples, here are CUSIP numbers for some stocks: Apple is 037833100, Alphabet is 02079K107, Alaska Air Group is 011659109, and Walmart is 931142103.
Why Are CUSIP Numbers Important?
CUSIP numbers are unique identifiers for listed stocks and bonds, providing a standardized way to identify securities for clearing and settling market transactions.
What Does a CUSIP Number Tell You?
It tells you the exact type of security and who issued it, including whether it's something like a corporate bond or common stock.
What Can I Do With a CUSIP Number?
As an ordinary investor, you won't use it much—it's mainly for brokerages and clearing firms to ensure transactions are settled and recorded properly.
How Do I Look Up a CUSIP Number?
You can request a stock quote on a broker's website, which often includes the CUSIP, or check brokerage statements, physical certificates, or the Municipal Securities Rule-Making Board's EMMA system for bonds.
The Bottom Line
In summary, a CUSIP number is a nine-digit alphanumeric code identifying securities like stocks and bonds, developed in the 1960s to uniquely tag them and ease trade settlements. Each is unique, assigned by the CUSIP Service Bureau operated by the American Bankers Association, and used by financial institutions for tracking and clearing. You'll find them on bond certificates or in databases.
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