What is a CUSIP Number?
The CUSIP number is a unique identification code assigned to most financial instruments, including stocks of all registered U.S. and Canadian companies, commercial paper, and U.S. government and municipal bondsMunicipal BondsA municipal bond is a debt security issued by a national, state, or local authority to finance capital expenditures on public projects related to the development and maintenance of infrastructures such as roads, railways, schools, hospitals, and airports.read more.
Some examples of CUSIP numbers are given below.
| CUSIP of Common Stock | CUSIP of a Bond Issue | |
|---|---|---|
| Microsoft | 594918104 | 594918AD6 |
| Procter & Gamble | 742718109 | 742718EV7 |
| Johnson & Johnson | 478160104 | 478160AF1 |
What is the Full Form of CUSIP?
The full form of CUSIP is Committee on Uniform Securities Identification Procedures.
The system was born out of a need to develop a standard method of identifying securities to improve operating efficiencies across the industry. The American Bankers Association (ABA) was tasked to find a suitable system for the same in 1964 by the New York Clearing House Association. As a result, the Committee on Uniform Security Identification Procedures was created, and the CUSIP system was instituted. The CUSIP Service Bureau was formed to administer the system in 1968.
CUSIP Global Services (CGS), the overarching entity for all offerings, is managed on behalf of the ABA by S&P Global Market Intelligence. CGS has a Board of Trustees having a representation of various leading financial institutions.
CGS is the numbering systems or agency for
- The United States and Canada.
- The Cayman Islands, British Virgin Islands, and Bermuda.
- 35 Other markets throughout the Caribbean and Central/South America.
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For eg:
Source: CUSIP Number (wallstreetmojo.com)
CUSIP System
This identification system provides descriptive information about various securities, which makes it easier to track securities across all phases of processing and analysis. The system covers a wide range of global financial instruments and currently covers over 14 million financial instruments.
A system called CINS is used to codify and identify foreign securities, which is similar to the CUSIP system.
The criteria for assigning these to equity or debt instruments of issuers are as follows:
| System | Equity | Debt |
|---|---|---|
| CUSIP | Public (unrestricted) offering by US or Canadian Issuer Private (restricted) offering in US by any issuer – In accordance with Rule 144A or Regulation D | Public or Private debt offering in US by any issuer – SEC registered; as per Rule 144A or Regulation D |
| CINS | Equity offerings Exclusively outside the US and Canada – Regulation S stock offering by US company on UK AIM Exchange or in Germany Public Offering in US by non-US or Canadian issuer (except ADR/GDR) Across Cayman Islands, Bermuda and British Virgin Islands | Debt offered exclusively outside the US and Canada – Eurobonds – Regulation S (any issuer) |
Format of the CUSIP Number
These numbers capture an issue’s significant differentiating characteristics based on a 9-character identifier with a common structure. Given is the format of both CUSIP and CINS numbers.
CUSIP Format
Amazon.com Inc. – Common Stock
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Source: CUSIP Number (wallstreetmojo.com)
The CINS identification system uses a nine-character structure similar to the CUSIP, but additionally contains a letter in the first position to denote the issuer’s country/geographic region.
CINS Format
Abingdon Capital PLC – Shares
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For eg:
Source: CUSIP Number (wallstreetmojo.com)
How to Find Your Securities CUSIP Number?
They are mentioned on the face of the security documents, as is shown in the specimen samples below.
#1 – Specimen Share Certificate
Source: SEC archives
#2 – Specimen Bond Certificate
Source: oldstocks.com
Therefore, in the case of securities owned, the CUSIP number can be obtained directly from the security documents, offer documents, from securities brokers, on the website of issuing companies, or by contacting the investor relations department of the issuing entity. Entities usually mention the number of their common stock on their website.
- Brokerage firms and websites targeted at providing securities research also include the CUSIP number in the profile information of the concerned stock or bond. E.g., CBXmarket.
- In the case of common stock, a general Google search with the trading symbol of the stock is likely to yield results on the CUSIP number.
- This unique number of municipal bonds can be found from a system called Electronic Municipal Market Access (EMMA), managed by the Municipal Securities Rulemaking Board.
- CGS’s ‘CUSIP Access’ is a fee-based web service that provides access to the entire universe of identifiers and a standardized description of the securities.
- These numbers can also be found using other web-based search tools offered by various investment houses and brokers such as Fidelity Investments.
Why does an Investor Need a CUSIP Number?
An investor is required to quote the CUSIP number in forms and documents on purchase and trade of stocks or bonds.
Additionally, the following benefits also accrue to investors:
- Since these numbers are unique and specific to each security, it allows for easy identification and tracking of stocks, bonds and funds, etc. to ensure accurate execution and documentation of trades, settlement, and clearance.
- Information specific to the trades, yield, and performance of a stock, etc. can be obtained by way of research using CUSIP number.
- It allows issuers to map individual securities to the investors, making it easier to track payouts of interest and dividendDividendDividend is that portion of profit which is distributed to the shareholders of the company as the reward for their investment in the company and its distribution amount is decided by the board of the company and thereafter approved by the shareholders of the company.read more, etc.
Conclusion
Under the CUSIP system, securities are provided a unique identification code that enables clear tracking of the issue and security-related details, facilitating ease of execution of trades, settlements, and payouts for both the investor and the issuer.
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