Before we get started on this topic, let me remind you what does the “CUSIP” acronym stands for: “Committee on Uniform Security Identification Procedures”.
The “Committee on Uniform Securities Identification Procedures” was formed in the year 1962 and developed a system to identify securities in the USA and Canada, with the main purpose of facilitating the clearing and settlement of trades. It uniquely identifies a specific type of security for the accurate and efficient recognition of most of the financial instruments, including municipal bonds, stocks, and commercial paper, worldwide.
The CUSIP number is a 9-digit code which consists of both letters and numbers, which uniquely identify a company or issuer and the type of financial instrument it represents. There are over 1 million different bond issues which require different unique identification codes, so brokers, investors and financial planners may identify the purchases they can make depending on their portfolios.
For example, 38377JZM8 is a CUSIP number where the first 6 characters are known as the base, also called as CUSIP-6, and it identifies the Bonds issuer. The 7th and 8th digit identify the type of issue i.e. it differentiates between fixed income, equity or other security. The 9th digit is an automatically generated “check digit” (sometimes ignored).
CUSIP number format
Character/Position 1 to 2: Product code
Character/Position 3: Type of Mortgage
Character/Position 4 to 6: Coupon
Character/Position 7: Maturity
Character/Position 8: Settlement Month
Character/Position 9: Check Digit
There is also a way to represent an International CUSIP number known as the CINS, “CUSIP International Numbering System” which identifies foreign securities. It follows the same 9 character systems as the CUSIP does, but it contains a letter in the first position to signify the issuer’s country or geographic location.
It is a growing system since its incorporation to cover many areas such as Government, Corporations, Banking, municipal and international securities with primary importance in the Bond market.
But where can we find CUSIP numbers?
It has always been very difficult to find any information on fixed income securities investors are considering to purchase, so even when you have a CUSIP number given to you by a broker or financial planner, in order to access more data to validate these investments, you must pay a fee or similar service that has access to the CUSIP database, or spend a lot of time (more like days) trying to find any CUSIP number by looking for them on the web that won’t show you all of the information necessary on the specific security that you are looking for.
Also, there are millions of CUSIP numbers in the Bond Market, and there is not one dedicated and transparent source that would allow you to have access to all this information. That is why PFITR developed the “Bond Price Validation tool” or “BPV Tool” in short, so any Institutional Investor may have the source of all CUSIP numbers in the bond market at the tip of their hands.
The best part is that it gives them immediate access to completely transparent and up-to-date real market information. The moment its
users enter any CUSIP Id into the tool, their screens will display every key features and variables pertaining to that security. This enables the investor to overview the description of the bond they are validating through our solution, with up-to-date data like quantifiable risks, historical price charts, and real market pricing.
Every investor, broker and financial planner must check this tool out, and here is the link!
Need to say more? smart people always find smart solutions!