Tag: CUSIP number

  • Difference Between CUSIP And ISIN Codes

    Difference Between CUSIP And ISIN Codes

    Difference Between CUSIP And ISIN Codes
    While the company’s reports may not all be true, nothing can be hidden if you use CUSIP for the US companies and ISIN for international trading.

    CUSIP and ISIN codes are some of the most well-known securities identification numbers that are used to trade.

    If we have in mind that both are codes used for securities to help settlement and clearing in trading, what is the difference between CUSIP and ISIN?
    ISIN stands for International Securities Identification Number, while CUSIP stands for Committee on Uniform Security Identification Purposes. Both are displayed as codes Let’s look at the difference between CUSIP and ISIN.
    We already explained in the previous post what CUSIP is, let’s explain what ISIN is to understand the difference between them.  

    What is ISIN?

    It is a security code that consists of 12 alphanumeric characters. ISIN is used almost all over the world, but it is particularly known and used in Europe. So, we said it consists of 12 characters where the first two are the country code. It is followed by 9 alphanumeric characters which are the national security identifier, and we have one more digit, the 12th. 

    Difference between CUSIP and ISIN

    Well, where is the difference between CUSIP and ISIN if both serve to help settlement and clearing in trading securities?

    The first difference is that CUSIP, mostly used in the US, North America actually, consists of 9 alphanumeric digits. The first 6 letters outline the issuer, the next two digits represent the issue, the last figure is the check digit.

    Both have the same purpose to uniform the identification of securities which are settled and traded.

    ISIN is accepted for shares, futures trading, options, derivatives, and debt security that are traded and settled. This code looks something like this: two letters to identify the country, for example, Germany, so they would be GE. The next we have a national security identifier formed of nine digits, for example, “275946739” and as the last but not the least one check digit.

    The country code is provided by the International Organization for Standardization or shorter ISO. The National Numbering Agency (NNA) provides the national security identifier for every country in particular.

    What is the check digit? 

    The check digit is received by using the Modulus 10 Double Add Double system. This system converts the letters to numbers by adding their place in the alphabet to nine. 

    To calculate the check-digit, use the first 11 digits, and start at the last number and go from right to left. Each second digit you should multiply by 2. Letters are converted to numbers. You’ll have a string of digits as a result. All numbers over 9 separate into 2 digits. Add them up. The next step is to subtract from 10 and you’ll have the ISIN check digit.

    For example, when the final result is 0, that means the check digit is 0.

    Alphabetical letters are transferred to a numeric value. The letter A is 10 and the others are as following:

    A = 10; B = 11; C = 12; D = 13; E = 14; F = 15; G = 16; H = 17, etc where  Y = 34.

    To summarize,  convert letters to numbers by using the model above but start from the right last digit, every other digit multiply by 2. Subtract the result from the smallest number ending with 0 to get the check digit.

    The check digit for CUSIP is calculated by converting letters to numbers by using their position in the alphabet. Every second digit multiplies by 2 to get the CUSIP check digit.

    The importance of these codes to investors

    ISIN codes are important for companies that have investors or want to raise the capital. The main purpose of the ISIN code is to clear and settle trades. 

    Both the ISIN number and the CUSIP number are an official code that is required today. The numbers will help you to identify the security. They are kind of a personal social security number for the companies. 

    For example, the ISIN number is necessary for cross border trading. Moreover, ISIN code has many purposes.

    An ISIN or CUSIP number isn’t a ticker symbol that spots stock at the market. For example, the company may have several ticker symbols. That depends on trading platforms but its securities will have the same ISIN number. ISIN code is required but companies cannot create the ISIN code themselves. When a company wants to have an ISIN number it has to contact the numbering agency, for example, the Association of National Numbering Agencies (ANNA).

    How to convert CUSIP to ISIN?

    The CUSIP number is entirely included in the ISIN number. The ISIN is a larger code with 2 prefixed letters, for example, the “US” for the United States of America. CUSIP number doesn’t have this prefix because it is entirely a North American identifier.

    For example, ISIN US0328974369 is extended from CUSIP 032897436. Keep in mind that this is an imaginary example, and as such not a real example. Let’s go further! You can notice that country code is added on the front of this numeric phrase, and the check digit is at the end. So. we can easily recognize that the issuer is from the US. 

    Let’s determine the digit at the end. Just a bit of math more.

    Let’s convert letters to numbers.

    U = 30, S = 28. 

    So we have 

    US0328974369 as 30280328974369

    The next is to collect odd and even numbers.

    30280328974369 = (3, 2, 0, 2, 9, 4, 6); (0, 8, 3, 8, 7, 3, 9)

    Now we have to multiply the group containing the rightmost numbers (meaning the FIRST group) by 2:

    3×2 + 2×2 + 0x2 + 2×2 + 9×2 + 4×2 + 6×2

    which is 

    6 + 4 + 0 + 4 + (1+8) + 8 + (1+2) 

    Now, add up the individual digits

    6 + 4 + 0 + 4 + (1+8) + 8 + (1+2) + (0 + 8 + 3 + 8 + 7 + 3 + 9)  = 72

    Then use the 10s modulus of the sum.

    Bottom line

    The CUSIP number is important to help the settlement and the trading securities. The CUSIP consists of nine characters, with letters and numbers. It is assigned to securities that are traded in the United States and Canada. CUSIP numbers are publicly available. 

    ISIN Numbers are expanded CUSIP numbers and represent the International Securities Identification Number system.

    This is how the international system for the clearance of securities is established. The difference between CUSIP and ISIN is in 3 digits and we showed you what they are and how to calculate them. Both can simplify trading, selling, or buying securities, especially in international investing.

  • The CUSIP Number For Stocks, Bonds, Mutual Funds

    The CUSIP Number For Stocks, Bonds, Mutual Funds

    The CUSIP Number For Stocks, Bonds, Mutual Funds
    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: 

    Facebook: 30303M102
    Microsoft: 594918104
    Apple: 037833100
    Coca-Cola: 191216AZ3
    Johnson & Johnson: 478160104
    Walmart: 931142103
    Amazon: 023135106 

    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.

    Bottom line

    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.