CUSIP number

Definition

A CUSIP number, short for Committee on Uniform Securities Identification Procedures number, is a unique nine-character alphanumeric code assigned to financial instruments, including stocks, bonds, options, and other securities, as well as issuers of those securities. 

What is a CUSIP number?

The primary purpose of a CUSIP number is to provide a standardized and unique identifier for each security and issuer in the financial markets. This helps streamline trading, settlement, and regulatory reporting processes by ensuring accurate and efficient tracking and recording of securities transactions.

A CUSIP number consists of nine characters, which are alphanumeric (a combination of letters and numbers). The structure of a CUSIP number is as follows:

• The first six characters represent the issuer or company that issued the security.
• The seventh and eighth characters represent the specific security issued by the company.
• The ninth character is a check digit used for error detection.

CUSIP numbers are widely used in various financial activities, including:

• Securities trading: CUSIP numbers are used to identify securities in trading systems, order routing, and trade settlement processes.
• Portfolio management: Investment managers use CUSIP numbers to track and manage securities holdings within their portfolios.
• Regulatory reporting: Financial regulators require CUSIP numbers for identifying securities in regulatory filings and reporting.

While CUSIP numbers are primarily used in the United States and Canada, they are also recognized and used internationally in some cases. However, other regions may have their own standardized identifiers for securities.

Example of a CUSIP number

CUSIP number: 123456789

In this example, the CUSIP number “123456789” represents a security issued by a fictional company. The first six characters “123456” could represent the issuer, and the last three characters “789” could represent the specific security issued by the company. The ninth character is a check digit used for error detection.