CUSIP

A CUSIP is a nine-character alphanumeric code that uniquely identifies a financial security in the United States and Canada. The name comes from the Committee on Uniform Security Identification Procedures, the body that designed the system. CUSIPs are assigned to shares, corporate and municipal bonds, government and agency debt, fund units, commercial paper and many other instruments, and they are used by brokers, custodians, depositories and data vendors to make sure that all parties to a trade are referring to the same security.

The CUSIP is the national securities identifier for the United States, and it forms the core of the international ISIN for US and Canadian securities. It plays the same role in North America that SEDOL plays in the United Kingdom, and it is distinct from a ticker symbol, which is a trading shorthand assigned by an exchange and can change or be reused.

In the 1960s, rising trading volumes on Wall Street overwhelmed the manual handling of paper share certificates, a period often called the paperwork crisis. Firms described securities by name in inconsistent ways, which caused errors and failed deliveries. The American Bankers Association set up the Committee on Uniform Security Identification Procedures in 1964 to develop a standard numbering scheme, and the system came into use in 1968.

The CUSIP system is owned by the American Bankers Association and operated under contract by CUSIP Global Services. For decades the operator was part of Standard and Poor's; the business was sold to the data company FactSet in a transaction completed in 2022. The Depository Trust Company, the central depository for US securities, requires a CUSIP for the securities it makes eligible.

The nine characters fall into three parts.

• Issuer number (characters 1 to 6). The first six characters identify the issuer, such as a company, a municipality or a government agency. Large issuers may have more than one.
• Issue number (characters 7 and 8). The next two characters identify the particular security. By convention, numbers are generally used for equities and letters, or a mix, for debt.
• Check digit (character 9). The last character is calculated from the first eight using a modulus 10 formula in which every second value is doubled. It allows systems to detect most typing errors.

Securities issued outside North America can be given a code under the CUSIP International Numbering System, known as CINS. A CINS has the same nine-character layout but begins with a letter that indicates the country or region of the issuer.

An issuer, its underwriter or its legal counsel applies for a CUSIP before a new security is offered, supplying the offering documents. The code is then carried in the prospectus, on trade confirmations and in the security master file of every firm that handles the security. It is a basic element of instrument reference data and appears in each settlement instruction, in regulatory filings and in tax reporting.

A new CUSIP is usually issued when a corporate action changes the nature of a security, for example a merger, a reverse split or a change of name, so that positions in the old and new securities are not confused. Tracking these changes is a routine task in securities operations.

The ISIN for a US security is built by placing the country code US in front of the nine-character CUSIP and adding a further check digit, giving twelve characters. CUSIP Global Services acts as the national numbering agency for the United States within the Association of National Numbering Agencies. A CUSIP identifies a security, not the entity that issued it; entities are identified by the LEI. The FIGI is an alternative, openly licensed instrument identifier that can also distinguish the venue on which a security trades.

Unlike some identifiers, the CUSIP database is proprietary. Firms that store or redistribute CUSIPs in bulk generally need a licence and pay fees, in addition to whatever they pay their data vendors. Users have long objected to these charges, arguing that an identifier embedded in regulation and market practice works like a public utility. In 2011 the European Commission accepted binding commitments from Standard and Poor's to end certain licensing fees for the use of US ISINs by European financial institutions, following a competition investigation.

In the United States, regulators including the Securities and Exchange Commission have considered whether official reporting should permit or require open identifiers instead. Supporters of the CUSIP reply that its long history, wide coverage and central review of each new issue give it a reliability that is costly to replace across the industry's systems.

• CUSIP Global Services
• Association of National Numbering Agencies