What is CUSIP Number?

There are many companies that are listed on Indian stock exchanges. There are thousands of companies listed on the Indian stock exchanges. Individuals trade and invest internationally in a globalized world. Multiple international exchanges allow companies to be listed. It is important to have an identification system in order to avoid confusion when there are many shares and bonds around the globe.

Stock symbol is the first level of identification. However, two companies may have the same symbol on different exchanges. A CUSIP number solves the problem of unique identification.

What's the CUSIP number?

CUSIP numbers are unique numbers that are assigned to stocks and bonds across the United States and Canada. It can also be assigned to municipal bonds, as well as less common options such preferred stocks and syndicated loans. CUSIP numbers are used to distinguish between publicly traded securities within the North American countries. The CUSIP number serves two purposes. CUSIP numbers are designed to seamlessly integrate with computer-based record-keeping systems. CUSIP stands for Committee on Uniform Securities ID Procedures. It is owned by both the American Bankers Association and Standards & Poors. CUSIP numbers can be used by investors to track any security and the exchanges for settlement and clearing.

Understanding CUSIP number

CUSIP number consists of nine characters. It is usually made up of numbers, but it can also include alphanumeric characters. The CUSIP number works in the same way as the serial number for products in a supermarket. It is the serial number of securities. Let's look at the CUSIP number to understand its meaning. CUSIP-6 is the name of the CUSIP number. The first six characters identify the issuer. The seventh and eighth characters are used to identify the security type. The ninth character is the check number, which is generated automatically. All trades must be cleared and settled efficiently using the CUSIP number. To ensure a foolproof tracking of trades, the CUSIP number for all securities is recorded.

Locating the CUSIP number

The Municipal Securities Rulemaking Board makes CUSIP numbers publically available. CUSIP numbers are also included in financial statements relating to the sale or purchase of securities. CUSIP numbers include Apple 037833100 and Microsoft 594918104, as well as Amazon Inc 023135106. CUSIP numbers are only available in the USA and Canada. However, financial markets around the world use the same principles so all securities must have a unique identification number. An alphanumeric code, the International Securities Identification Number (ISIN), is used to identify securities around the world.

ISIN and CUSIP

CUSIP and ISIN are both codes that can be used to identify securities. They differ in their structure and applicability. The CUSIN number can only be used in the USA and Canada. ISIN, however, is used to identify securities worldwide and facilitate their selling and buying. CUSIP is managed by Standard & Poors and is owned by American Bankers Association. ISIN is administered by International Organisation for Standardization.

CUSIP numbers are nine-digit codes, while ISIN is twelve characters. The country code is the first two letters of ISIN. This is followed by nine alphanumeric character, also known as the national security identification number. A check digit follows the 11 characters. The country code for India, for example, is "IN". The ISO issues the country code, while each country's National Numbering Agency provides the national security identifier.

Conclusion

CUSIP numbers are essential for seamless trading of financial securities. The financial markets might not function effectively if they do not have a unique identification number for each security. The CUSIP can be used in North America. However, India uses the ISIN. The ISIN is required for many financial activities.