A CUSIP number is Wall Street's way of identifying an investment security, like a stock, bond or mutual fund.
Officially, a CUSIP number (more formally known as the Committee on Uniform Securities Identification Procedures) identifies all registered U.S. publicly-traded companies and all U.S. government and municipal bonds. A CUSIP also identifies less traditional investment securities, including preferred stock; funds; certificates of deposit; syndicated loans; and U.S. and Canadian listed options.
The CUSIP number is a powerful aid in helping investment companies, investors, and government regulators track a security, and is especially helpful in managing an efficient trade clearance and settlement process.
Ownership and History
The CUSIP system is owned by the American Bankers Association and is largely operated by S&P Global.
The CUSIP's history dates back 55 years, when the CUSIP was invented to identify U.S. and Canadian stocks, U.S. bonds (both public and private) and mutual funds.
The CUSIP set-up was engineered by both the New York Clearing House Association in partnership with the American Bankers Association. It was the ABA that created the CUSIP committee and established regulations and procedures to guide the industry use of CUSIP numbers.
In 1968, the CUSIP Service Bureau (now known as CUSIP Global Services) was created to actually manage the entire CUSIP system, working with (and for) the ABA to ensure that CUSIP numbers would be widely available and used correctly by broker-dealers, bond investors and other high-profile financial industry organizations and companies.
Fast forward to today and the CUSIP system now holds data on 44 million financial instruments, according to S&P Global, making it one of the largest holders of financial and investment data in the world.
Why Would an Investor Need a CUSIP Number?
Knowing a security's CUSIP number can help a regular investor in multiple ways.
It can help you more easily research a stock, bond or fund. On good, solid stock research sites, a CUSIP number is your shortcut to getting great (and more comprehensive) research on a company or bond issuer.
You may need it to full out securities-related financial forms. Often, investors are required to fill out financial forms after the purchase of shares of stocks, funds, or form bond purchases. Knowing the security's CUSIP number can make this process faster and efficient.
A CUSIP insures proper categorization of your security purchases. Since the CUSIP number can precisely identify a publicly-traded security, stocks, bonds and funds are more easily found and documented. That ensures your securities trades are processed, cleared and settled correctly.
A CUSIP number also makes it easier to identify stock owners, so they can be properly paid out on dividends and interest earned on a securities purchase.
How CUSIP Numbers Are Structured
In working order, a security's CUSIP number includes nine characters that may have both letters and numbers.
Each CUSIP number (yes, they're mostly referred to as "numbers" on Wall Street) offers a unique method of singling out a security. It marks the company or issuer and denotes the type of investment security it is (i.e., such as a stock, bond or fund.)
Structurally, the first six characters in a CUSIP (known as the "base") designates the security's issuer, while the seventh and eighth characters identify the precise type of security. The last component, the ninth character, is called the "check digit" and is the least important and thereby least-used character in the CUSIP lineup, and isn't always used to clear or settle a trade.
It's worth noting that CUSIP numbers aren't the same as the numbers used to identify foreign stocks and securities. That system, called CUSIP International Numbering System or CINS, has a letter as the first character in its securities identifier (to note the security issuer's country), signaling it as a foreign security.
How Are CUSIP Numbers Assigned?
CUSIP numbers are assigned by CUSIP Global Services, the administrative organization that handles the distribution of CUSIP numbers.
The process is fairly straightforward. CUSIP Global Services offers an online application that companies can use to submit requests for a CUSIP number.
CSG requires the correct documentation and will insist that the application be filled out completely and accurately. The fee for getting a CUSIP isn't exactly onerous -- it's $100 for the application fee and another $80 a year to administer the CUSIP number.
Required documentation includes various fact sheets and registration numbers tied to the security in question. A full review of documentation needed to apply for a CUSIP can be found at CSG's application page.
According to CSG, the CUSIP application form and accompanying electronic documentation are all that is needed to complete the request. You'll be contacted by a CSG representative after the application form has been thoroughly reviewed.
How to Locate Your CUSIP Number
Historically, it's been problematic for average investors to get their hands on a stock, bond or mutual fund's CUSIP number.
That's by design, as the CUSIP database, run by S&P Global, is and has been primarily earmarked for investment firms who rely on a security's CUSIP to clear and process trades faster and easier.
Wall Street trading firms pay a fee for access (usually to S&P Global, but other data providers can be involved, too) to CUSIP data -- not just for the numbers, but for any data accumulated in the creation of the CUSIP number, including who bought or sold a security.
That said, investors increasingly have access to CUSIP number in this, the digital age. These web-based platforms can provide CUSIP information to Main Street investors.
Publicly Traded Companies Companies whose stock trades on the major financial exchanges carry their CUSIP numbers on their web sites, usually on their investor-relations page. For example, Microsoft's ( MSFT - Get Report) CUSIP number (594918104) can be found on its investorrelations page under the "questions and answers" section, which is common for most publicly traded companies.
The Municipal Securities Rulemaking Board The MSRB also offers CUSIP numbers via Electronic Municipal Market Access (EMMA) system.
On Various Security Documents Securities trades tend to generate a lot of paperwork, and on that paperwork, especially purchase orders and financial statements, will include a CUSIP number. The stock or security certificate will also have the CUSIP number.
On Fidelity's Web Site Mutual fund giant Fidelity offers an easy-peasy way to find a fixed-income (bond) security's CUSIP number on its corporate web site.
Just type in the kind of bond you're looking for and add in the exact name of the security and the CUSIP will pop right up, along with other key data.
Fidelity also offers a web page to find the CUSIP on individual publicly traded companies using that company's stock symbol.
On QuantumOnline.com Another quick and easy way to locate a CUSIP number is via Quantum Online's stock and security lookup database. Just like with the Fidelity site, simply enter in the stock symbol and you'll be directed to the company's financial page, where you can find the stock's CUSIP number.
Via a Basic Google Search It's relatively easy to fund a publicly-traded stock's CUSIP number via a basic Google search.
For instance, type in "Amazon CUSIP" on Google and you'll be led directly to a data directory on Investing.com that includes all critical financial information on (AMZN - Get Report) , including its CUSIP number.
What's the Difference Between a Ticker Symbol and a CUSIP Number?
While both a CUSIP and a stock-ticker symbol both identify publicly traded securities, that's where the similarity ends.
For example, a stock symbol is used on the front end of a trade, to identify a stock a buyer may want to purchase. The ticker symbol is widely used by broker, market makers and other trading professionals to accurately send security pricing and availability information (which used to be done on an old-fashioned teletype device, hence the name "ticker").
The stock symbol also allows a potential buyer to better research and purchase the stock, before the CUSIP number's job comes into play.
That job comes at the purchase, as a CUSIP number will appear on the trade confirmation, and it continues afterward as the stock certificate and related paperwork will all include the CUSIP number, thus making it easier to organize and document the security going forward.
CUSIP Numbers and Real-Life Securities
Using the search tools listed above, you can find the CUSIP number of any publicly traded security.
For instance, a quick look at Google will find the CUSIP numbers of these widely-traded stocks.
The Takeaway on CUSIPs
Think of CUSIP numbers as Wall Street's "bar codes" -- identifiers that allow for the proper designation, recording and documentation of publicly traded information.
That makes CUSIPs invaluable to both investors and investment firms and third-party trading partners. With a CUSIP, any security can be immediately accessed for trading information, security identification, and for security financial documentation needs.
No doubt about it, the CUSIP makes life easier for any party attached to a securities trade, clearance, settlement, and documentation.
And it's been that way for over 50 years.
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