CUSIP

Submitted by admin on Tue, 11/23/2021 - 23:15

What is CUSIP?

 

A CUSIP is a nine-digit numeric (e.g., 037833100 for Apple) or nine-character alphanumeric (e.g., 38259P508 for Google) identifier that identifies a North American financial security in order to facilitate trade clearing and settlement.
Under Accredited Standards X9.6, the CUSIP was adopted as an American National Standard.
The abbreviation stands for Committee on Uniform Security Identification Procedures and is pronounced "kju-sip."

The American Bankers Association owns the CUSIP system, which is run by S&P Global Market Intelligence.
CUSIP Global Services (CGS), the operating organisation, also functions as the North American national numbering agency (NNA), and the CUSIP serves as the National Securities Identification Number (NSIN) for products issued in both the United States and Canada.
CUSIP Global Services (CGS) assigns all US-based ISINs as part of its position as the NNA.

 

A CUSIP code is made up of nine characters.
The base (or CUSIP-6) is a set of six characters that uniquely identify the issuer.
Issuer codes are assigned in alphabetical order from a list that includes "gaps" for future expansion.
The 7th and 8th digits are used to identify the specific problem.
The 9th digit is a checksum that is created automatically (some clearing bodies ignore or truncate the last digit).
To provide for additional flexibility for expansion, the issuer code's last three characters can be letters.

 

In each block of 1,000 digits, the issuer numbers 990 to 999 and 99A to 99Z are retained for internal usage.
This allows a user to assign an issuer number to any issuer that is relevant to his holdings but does not meet the CUSIP numbering system's coverage requirements.
Other issuer numbers (990000 to 999999 and 99000A to 99999Z) are set aside for the user to allocate to non-security assets or to number various internal assets.

 

The 7th and 8th digits identify the specific issue, with the format depending on the security type.
In general, equities are denoted by numbers, while fixed income is denoted by letters.
For commercial paper, the first issue character is the maturity month's letter code, and the second issue character is the maturity date's day, with letters used for numbers more than nine.
The number "10" is assigned to the first security issued by a certain issuer.
Newer issues are numbered by adding 10 to the previous issue's number until it reaches 80, at which point the next issue is "88," and so on.
All options on stocks from that issuer are labelled with the issue number "01."

 

Fixed income securities are designated in a similar manner, but because there are so many of them, letters are used instead of digits.
The first issue is labelled "AA," followed by "A2," "2A," and finally "A3."
Because the letters I and O could be confused with the numbers 1 and 0, they are not used.


The special characters '*', '@', and '#' are also reserved by CUSIP for use with private placement numbers (PPNs) used by the insurance sector.

 

The 9th digit is a check digit that is created automatically using the Luhn algorithm's "Modulus 10 Double Add Double" approach.
Every second digit is multiplied by two to get the check digit.
Starting with A equal to 10, letters are translated to numbers based on their ordinal position in the alphabet.