CUSIP sets the standards for the alphanumeric security identification number on all securities issued in North America. The CUSIP number is a nine-character combination of numbers and letters used to facilitate the process of clearing a trade. The creation and formation of CUSIP numbers is a proprietary process of the American Bankers Association, and Standard & Poor’s handles the administration of CUSIP numbers. Attempts were made to expand the use of CUSIP worldwide, but the ISIN system quickly gained more acceptance.
Aptly known as the Committee on Uniform Security Identification Procedures, CUSIP sets the standards for the alphanumeric security identification number that appears on all securities issued in North America. Known as the CUSIP number, the string is a nine-character combination of numbers and letters used to facilitate the process of clearing a trade, as well as to set up trades.
The creation and formation of CUSIP numbers is a proprietary process of the American Bankers Association. Standard & Poor’s handles the administration of CUSIP numbers. Under the direction of these two organizations, the CUSIP Service Office handles the process of numbering securities that are assigned to products that are produced in the United States and Canada.
Each of the CUSIP sections has specific meanings. The first six characters of the CUSIP are known as the number base and are used to identify a specific issuer. The characters used in the seventh and eighth positions have to do with the nature of the security being issued. The characters in these positions can be numbers if the value is related to equity, while the letters are used to designate fixed income.
Ending the series in ninth position is what is known as the check digit. This digit is determined by taking the second character in the CUSIP and multiplying it by two. In the event that the second character is a letter, the value is determined by calculating the ordinal position of the letter in the alphabet to 9. In the event that multiple digits are the sum of the multiplication, the digits are added up to a single digit The sum has arrived.
During the latter part of the 20th century, attempts were made to expand the use of CUSIP worldwide. Dubbing the process as the CUSIP International Numbering System or CINS, the concept has never really achieved the support that was originally envisioned. Much of this is due to the launch of a competing system at the same time, known as an ISIN. With a less complicated approach to assigning identification numbers, the ISIN quickly gained more acceptance. However, CINS continues to appear in the ISIDPlus directory, which is a comprehensive work containing a wide range of information on international securities.
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