SEDOL

A SEDOL is a seven-character alphanumeric code that identifies a security. The name stands for Stock Exchange Daily Official List, the London Stock Exchange publication in which the codes first appeared. SEDOL codes are issued by the London Stock Exchange, which acts as the national numbering agency for the United Kingdom, and they cover securities from around the world as well as British ones. Brokers, custodians, fund managers and data vendors use them to identify instruments in trading, settlement, pricing and record-keeping.

The SEDOL is a national-level identifier, comparable to the CUSIP in North America, and it forms the core of the ISIN for UK and Irish securities. Its distinguishing feature is that codes are assigned for each country or market in which a security trades, so one share with one ISIN can carry several SEDOLs.

A SEDOL has two parts: six characters that identify the security, followed by a single check digit. Codes issued before 2004 were entirely numeric. Since then, new codes have been alphanumeric and begin with a letter; vowels are never used, which avoids accidentally spelling words. The code carries no meaning in itself: it does not encode the issuer, the type of security or the country.

The seventh character is calculated from the first six so that most keying errors can be detected. Each character is converted to a number, with digits keeping their value and letters taking the values 10 for A up to 35 for Z. The six values are multiplied by fixed weights, and the check digit is chosen so that the weighted total is a multiple of ten:

• $c_i$ is the numeric value of the character in position $i$.
• $w_i$ is the weight for that position; the six weights are 1, 3, 1, 7, 3 and 9.
• $\bmod\ 10$ means the remainder after dividing by ten.

For the six characters 0, 2, 6, 3, 4, 9 the weighted sum is 0×1 + 2×3 + 6×1 + 3×7 + 4×3 + 9×9 = 0 + 6 + 6 + 21 + 12 + 81 = 126. The remainder after dividing by ten is 6, and 10 − 6 = 4, so the full SEDOL is 0263494.

An ISIN has twelve characters: a two-letter country prefix, a nine-character national identifier and a check digit. For securities numbered in the UK, the national identifier is the seven-character SEDOL preceded by two zeros. The SEDOL 0263494 therefore becomes the ISIN GB0002634946, where the last digit is the ISIN's own check digit, calculated by a different method.

The two codes work at different levels. The ISIN identifies the security itself, wherever it trades. A SEDOL identifies the security in a particular market. A company listed in London, Frankfurt and New York has one ISIN for its ordinary shares but a separate SEDOL for each listing, which lets systems tell the lines apart when they have different currencies, prices and settlement arrangements. Other identifiers address the same need in other ways: the FIGI identifier is assigned down to the level of the trading venue, and a ticker symbol is unique only within one exchange.

Within firms, the SEDOL is stored in the security master file next to the ISIN and other codes, as part of instrument reference data. It is widely used as the key for price feeds, index constituent files and portfolio valuations, because a price belongs to a specific market and currency. UK unit trusts and other collective funds, which are not exchange-traded, are also commonly identified by SEDOL.

In post-trade processing, the code helps counterparties agree which line of a multi-listed security has been traded, supporting trade matching and securities settlement. Regulatory reports generally require the ISIN, and legal entities are identified separately by the LEI identifier, so the SEDOL acts as a complementary, more granular reference.

Codes are requested by issuers, their advisers or market participants through the London Stock Exchange's SEDOL Masterfile service, which also distributes the database of codes and associated descriptive data. Use of the database is subject to licence, with fees for commercial users, and this has drawn criticism from firms that would prefer freely usable identifiers. Once allocated, a SEDOL is not reused for a different security. A corporate event that creates a new line of stock, such as a reverse stock split, normally results in a new ISIN and new SEDOLs, and the change must be applied across security static data on the effective date.

• London Stock Exchange Group
• Association of National Numbering Agencies