CUSIP Number (2023): Everything You Need to Know ✅ (2024)

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Have you ever tried to get on a plane without any form of ID? Well, don’t—you won’t make your flight and airport security could penalize you.

Just as we need to be identified by airport authorities before we can fly anywhere, so do stocks, bonds, and all other securities, in a manner of speaking. Every security in North America has its own personal ID and it is called a CUSIP number.

CUSIPs are unique 9-character codes that are used in all the administrative processes to go on behind the curtains of American securities markets. Every transaction, ownership contract, and clearing procedure are managed using CUSIPs—and therefore, they’re a crucial part of our investing system. 📜

The CUSIP database holds IDs of over 44 million financial instruments and about 1000 to 2000 new entries are made every single day. But does thinking about all this bureaucratic stuff have a place in a retail investor’s life? Whether we like it or not, it does.

Keeping track of the CUSIP numbers of their portfolio allows investors to easily fill out financial forms that require these codes, and it can help them find the most up-to-date info about any security they’re interested in. That makes them handy, if not necessary to be aware of in some cases.

In this article, we will discuss how CUSIP numbers work, how useful they can be to investors, and how business owners can get their CUSIPs quickly and without falling into any bureaucratic pitfalls.

So, without further ado, let’s dive in. 🤿

What is a CUSIP Number? 📚

A CUSIP number is a unique identification number for all registered securities in the U.S. and Canadian financial markets. These numbers are used to create a clear distinction between different publicly-traded securities—in a way, a CUSIP is like a stock or bond’s social security number.

CUSIP stands for Committee on Uniform Securities Identification Procedures. This is the institution that gives each listed security its unique number that’s used for tracking and recording transactions by financial institutions.

Banks, brokers, and other financial institutions frequently use CUSIP numbers in many of their administrative practices, whereas individual retail investors mostly just need them to fill out tax forms. Nonetheless, knowing how CUSIP numbers work can benefit investors in more ways than one, which we will discuss a bit later.

How Do CUSIP Numbers Work? 👷‍♂️

The CUSIP system was owned and managed by Standard and Poor’s (S&P) and the American Bankers Association (ABA) until it was acquired by FactSet Research Systems in 2022. The system is used by the gigantic bureaucratic engine behind the American security markets to track any and all trades made by investors—in fact, it is so important that the new owners faced a class-action lawsuit because of concerns that they’ve monopolized this key administrative area.

For this system to work, every security has to have a unique designation. CUSIP numbers consist of 9 characters: The first 6 identify the issuer of the security, the 2 characters after that tell us what type of security we’re looking at (bond, stock, etc.), and the last character is the so-called “check digit” that is generated by running all the other digits through a specific formula, and it is used to make it so that we can easily tell real CUSIP numbers from fake or simply misspelled numbers.

This is the case with American securities, whereas foreign stocks and bonds traded on the U.S. stock markets use a slightly different system called CIN (CUSIP International Numbering). This system also uses 9 characters, but the first one tells us what the country of origin is. For example, if a number goes something like S09143AA2 the “S” tells us that the security is from South Africa and the “AA” tells us that it is a double-A bond—but more on that later.

Who Needs a CUSIP Number? 🤔

They say investing is like a marathon—it’s a long-term game, and sometimes, runners will take a taxi mid-race to cut their journey short and save themselves from burning too many calories. 🏃🏽‍♀️

To make sure that doesn’t happen, the judges of the marathon put a unique number on each and every contestant—that way, they can track runners and make sure everyone is playing by the rules and sweating their brains out. Basically, in order to compete, you must have an official identification number on your shirt.

Much in the same way, if a company wants to list its stock on an exchange, the stock must have a CUSIP number—those are simply the rules and the same goes for listed bonds and funds. Everything on the stock market has one and our whole financial system uses CUSIP numbers to function smoothly.

Differences Between Public and Private Investing 👨‍🏫

When it comes to publicly-traded securities, CUSIP numbers are a legal requirement. However, private investments do not need a unique identification number—this is because they aren’t transacted through public trading media and don’t require clearing, so a CUSIP is not necessary, and is therefore not required.

Essentially, if a startup wants to raise capital via a few private angel investors, a CUSIP isn’t needed, and shares can be sold directly. But if the startup decides to go public with an IPO, then it needs to do a bit of administrative legwork and make sure it is made official via a CUSIP number.

But no one likes administrative legwork since companies need to follow regulations and meet a bunch of specific requirements constantly in order to have CUSIP numbers. A good example of entities avoiding this legwork are hedge funds—they aren’t publicly traded and you can only buy a share in a hedge fund directly. 🎯

This spares hedge funds from having to share their strategies and disclose exactly what they’re doing to the public. This is why some have a reputation for using unsavory means to improve their business, but being secretive helps them get an edge over their competition so we can rest assured that they will keep at it.

Nonetheless, some hedge funds do tell the public what they are doing and this can be used to influence the markets. For example, a hedge fund made its gold investment public amid the Russian financial crisis of 2022, which might have led some investors to become bullish on gold—not having a CUSIP simply allows them to withhold some information when they find it advantageous.

CUSIP Number Format 📝

It’s about time we took a deeper dive into these numbers. Let’s start with the first 6 digits, a.k.a. the base. The first 6 digits identify the unique name of the entity (company), municipality, or government agency that issued the security—identifying the issuer is the only purpose of the base.

Then we move on to the 7th and 8th characters—these numbers identify the issue, or in other words, the type of financial product. This means these 2 numbers tell you if something is a common stock, ETF, mutual fund, bond, or whatever else—each asset type has its 2-digit code.

Needless to say, there are dozens of these codes and it’s near impossible to remember all of them. However, we can easily tell between them apart—debt securities like bonds typically have letters (like AA for double-A rated bonds) whereas equity securities use numbers (like 10 for common stock).

If a company issues more than one AA bond, we need a way to tell which is which. In this case, the first bond issued will have the identifier “AA,” the bond issued after that will have an “A2,” the next one will have an “A3,” and so on. But there is one letter that’s never used—CUSIP codes don’t use the letter O because it looks very similar to the number zero which might confuse the administrators that look at hundreds of CUSIP codes each day.

The ultimate digit is automatically generated and is used to make sure that a CUSIP is legit and valid. The 9th digit is calculated by multiplying all of the other digits by 2, summing everything up, and then summing up the digits until you get a single-digit number. Letters are converted into numbers based on their position in the alphabet, so the whole CUSIP is, in a way, contained in the final digit, also called the ‘check digit’.

Examples of CUSIP Numbers📙

Now, let’s see a few more of these numbers in flesh. But first, a small recap of how they work:

• ☑ The first 6 digits are known as the ‘base’ and they identify the issuer of the security
• ☑ The next 2 characters identify the type of the security
• ☑ The final character is an auto-generated digit used to further differentiate one particular security from others of the same type that were issued by the same entity.

As we can see, the 7th and 8th digits are the same for most of these stocks—this is because most of them identify a company’s common stock, which is marked as ‘10.’ Mutual funds, ETFs, and other classes of stock will all have their different identifying codes.

CUSIP Numbers: How Are They Assigned?🏗

All CUSIP numbers are assigned by an organization called CUSIP Global Services. To get a number, the issuer can fill out a fairly straightforward online form at CUSIP’s website—the issuer needs to provide some documentation about their business and fill out the required form in its entirety without any errors to be accepted.

This might be a bit of a hassle but at least it isn’t expensive—the application fee is $100 and all CUSIP number holders need to pay an annual administration fee of $80 to maintain their status. The full list of required documents is on CUSIP Global Services’ website—after the application has been submitted and checked, an official CUSIP representative will contact the issuer to finalize the procedure. All in all, the process is as simple as they come.

Why Do Investors Need a CUSIP Number? 🔍

Why would anyone who isn’t working in Wall Street need to know about CUSIP numbers? Well, to be honest, we ‘civilians’ don’t have too many applications for this knowledge, but there are a few benefits that more interested investors can reap by knowing the CUSIPs of all their investments.

First of all, a CUSIP can help investors with research. When you research a financial product using its CUSIP, you’ll get data on who is the exact owner, what the exact type of the financial product is, and some other most up-to-date info. This makes the nitty-gritty in-depth fundamental analysis easier, especially when it comes to fixed-income securities which are often harder to find and distinguish between. So, once you’ve identified and signed up with a stock broker, you can use CUSIP numbers to conduct necessary research on securities you’re interested in before investing.

Second of all, various financial forms you need to fill and give to your broker, the IRS, and other institutions will require you to provide CUSIP numbers for your investments—it is easier to do this if you’re prepared ahead of time and have all the CUSIPs ready. Also, some bond purchases will require you to fill out forms that require a CUSIP, so knowing how they work can be a relief for any investor’s bureaucratic burdens.

And finally, CUSIP numbers are used by companies to track to whom they should send dividend payments and how much. Therefore, knowing a CUSIP can tell the investor the exact yield of any dividend stock or bond—that way, you can be sure of what you’re getting when buying these passive income assets.

How to Locate a CUSIP Number 👨‍💻

Most of the time, companies post these numbers on their official websites for all their financial products, but this isn’t a 100% sure way of finding the up-to-date code. While you can’t always search for CUSIP numbers directly through a stock broker, there are several accessible ways to locate them. One of the easier ways to identify a CUSIP number is to look up the security through a Google search.

You can also use the “Find Symbol” tool on Fidelity Investments to locate a financial product’s security symbol. If you’re looking for Apple’s CUSIP number using this tool, just enter the name of the company and the CUSIP number will be shown. But take note that you’ll need a registered Fidelity account to access this information.

Alternatively, you can use the MSRB’s Electronic Municipal Market Access (EMMA), but this platform is more advanced and may confuse new investors. QuantumOnline also has a search tool similar to the one on Fidelity investments, but you don’t need to create an account to access this information. Most of these sites also include other important information about the securities including the company’s online profile, stock-related information, press releases, etc.

ISIN vs. CUSIP: Let’s Compare ⚖

To use a quick analogy, ISIN is CUSIP’s European cousin. CUSIP numbers are the standard in the U.S. and Canada whereas ISIN is used on the old continent and worldwide. These two types of identification numbers have different formats but they do the same thing—they identify unique financial products.

International Securities Identification Numbers (ISINs) have 12 characters and are assigned and managed by an organization called the International Organization for Standardization, based in Switzerland. An ISIN has letters as its first 2 characters—these tell you the country of the asset’s origin and let you easily distinguish an ISIN from a CUSIP.

For example, the ISIN of the Indian Oil Corporation Ltd. stock is INE242A01010. As we can see, the identifier for Indian entities is “IN.”

The rest of the number pretty much follows the same logic—the first 9 digits identify the issuer, the 2 digits after that identify the type of product, and the last digit is the so-called check digit. American investors who want to directly buy foreign shares and bonds might need to look up their ISINs to fill out any required documents, but otherwise, the utility of knowing this number is the same as the utility of knowing your assets’ CUSIP.

Ticker Symbol vs. CUSIP Number: What’s the Difference? ⚔

It’s not hard to distinguish between a ticker symbol and a CUSIP number—they’re completely different. Here is what sets them apart exactly:

Stock ticker symbols in the U.S. stock markets consist of one or a few alphabet letters, and in other stock markets, they can use both letters and numbers—for instance, most Japanese stock tickers are 4-digit numbers.

Even though every ticker symbol is unique in its local stock market, stocks from different countries can have the exact same symbols. For example, the symbol “FA” is shared by the U.S.-based First Advantage Corporation and the Canadian Fountain Asset Corp.

Unlike ticker symbols, CUSIP numbers are always 9 characters long and every single one in existence is unique. And, since it is essentially a code where each digit has a meaning, just reading a CUSIP number can give you some basic info about the financial product.

Obviously, it is much easier for an investor to navigate the stock market by looking at ticker symbols because they are short and easy to remember, unlike CUSIPs. That is why generally only financial institutions use CUSIP numbers—even though they can have some utility for the retail investor as well.

Conclusion 🏁

The CUSIP system is one of those areas of finance that is mostly relevant to institutions that track and manage security transactions. Almost every essential process in the U.S. that happens behind the stage uses CUSIP to track securities—this includes determining ownership status, clearing, and record-keeping.

Retail investors have little use for these unique 9-digit codes that identify their securities. However, CUSIP numbers are required for filling out some legal forms and can be handy when trying to find the owners or issuer of a security.

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All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.