This nine-digit code is in use for over 50 years but not all investors recognize the benefits of using it.
What is the CUSIP number? It is a code that consists of nine characters. These characters are numbers and letters together. A CUSIP number is giving investors a sure way of recognizing investment security, for example, stock, bond, or mutual fund.
A ticker symbol and a CUSIP number both identify publicly traded securities. The ticker symbol originates from the 1800s with the beginning of the New York Stock Exchange. The original name was and still is, stock symbol, but it was used for sending the prices and trades to investors and brokers info by teletype. The teletype was also called ticker.
Another important information about stock, bonds, or mutual funds could be found in the CUSIP number. CUSIP is an abbreviation for Committee on Uniform Securities Identification Procedures.
It is a code
This 9-characters code is a kind of DNA for the assets traded in the markets. It shows the name of the company or issuer of the security and what kind of security the asset is. Each character explains something. The first six characters are assigned by the alphabet and they identify the issuer. The 7th and 8th characters could be numerical or alphabetical but both will display the type of security. The last character is a digit and serves as a check digit.
They look like this:
Johnson & Johnson: 478160104
So we explained how CUSIP looks like and let’s see what a CUSIP number is, how to use it, and why it is important.
What is the CUSIP number else?
CUSIP number helps to ease procedures, for example, settlements and transactions trades. It is a numeric detector better adapted to computer users.
The CUSIP number is excellent when you need to identify assets registered to be sold publicly. This standardized “language” for all participants in the stock markets is a great help because the whole clearing process and transactions are more efficient thanks to it. For private investments, this CUSIP number means nothing since they don’t have public transactions or clearing. It is important for the publicly traded assets only.
As we mentioned, it identifies all publicly-traded companies, assets, and all government and community bonds. Using CUSIP you can easily identify preferred stocks, certificates of deposit, loans, and listed options in the US and Canada. But what is the CUSIP number more, how can you use it else?
It is very helpful for investors to track security but also it is a helpful aid in managing trade clearance and settlement processes. Moreover, if you use CUSIP you can easily eliminate any mistakes that might happen when you use the ticker symbols only, for example.
How to use CUSIP?
Computers use the CUSIP number to recognize particular assets traded in stock markets. By using CUSIP you’ll have access to all market information such as trade data, or other information regarding securities and issuers. The CUSIP number is a great mechanism to easily and quickly locate all that data.
When you have an investment’s CUSIP number, it is easy to examine all information about it on financial sites. It is very important to have as much as possible information before you decide to buy or sell the investment and these numbers are great to help. We are sure you already have heard how useful they are when used to identify municipal bonds, but investors can use them for other investments also.
So, you can use the CUSIP number to identify, sell, or buy some investment. As always, savvy investors will double-check this number and examine if it matches the name of the investment. Of course, if it is visible, sometimes it isn’t and that could be a problem. Anyway, the bigger problem is that people aren’t as much concerned as they should be when it comes to examining investments. The common mistake is a mistyped name of the company or security. Try to do this precisely or you’ll end up putting your money in the wrong company. That could hurt you a lot.
Is it easy to find a CUSIP number?
Unfortunately, not. The American Bankers Association owns and forms these numbers. To have access to these numbers you’ll have to pay a fee to some service with access to the database. For example, S&P Global Ratings.
However, there are some other ways. You can find this stock symbol on the company’s website, it is often displayed there. Also, you can get access to these numbers by the EMMA system (Electronic Municipal Market Access) or you can find them on confirmations of purchase or periodic financial statements. Another way is via securities dealers.
Maybe the simplest way to access the CUSIP numbers is the quote search on some investments website. For example, the Fidelity Investments website. All you have to do is to add the company’s name and the CUSIP number will be displayed. These numbers can be found on trade confirmation, account statement, the official statement. Also, your broker can provide it for you.
Why would you need this number?
Well, it can help you in many ways. For example, to search the stock. Yes, it will provide you a shortcut to getting a full examination on a company or stock issuer. Also, the process of filling out financial forms after you bought stocks or any other asset is easier if you know the CUSIP number.
A CUSIP number warrants a precise categorization of your stock buying since it can accurately identify publicly-traded stocks. So it is easier to find and document it. That secures your stock trades to be processed, cleared, and settled precisely. By using this stock symbol with nine digits you can identify who the stock owners are.
Alternatives to this symbol
The CUSIP number isn’t the most convenient way to point to investment, to say honestly. It isn’t easy to memorize nine digits, moreover, it isn’t always easy for investors to recognize it. Sometimes it is easier to use some other identifier.
For example for stocks, it is far easier to use the ticker symbol. They are more recognizable because you can find them in the media, most financial websites, etc. You will use the ticker symbol not CUSIP when you want to examine some stock or to invest. But examining using the CUSIP will give you more comprehensive information and more details about the stock. A ticker symbol is a great tool and broadly used but the CUSIP number is more accurately identifying the investment.
How to discover the CUSIP number?
In the past, it’s been hard for ordinary investors to obtain the CUSIP number. However, this digital world provides easy access to it. Almost all financial web-based platforms offer that. Also, almost all companies that are traded on the major exchanges have their CUSIP number on their web locations. You can find it usually on investor-relations pages, mostly under the “Questions and Answers” category.
The CUSIP number is a kind of bar code for publicly-traded securities. It provides the precise classification, record-keeping, and documentation of trading data.
That makes CUSIP priceless to investors. By using it they have access to any security immediately and get trading information, security identification, and secure financial documentation they could need to make a proper investment decision. That is to say, investors’ life and decision-making processes are easier thanks to CUSIP.