CUSIP

CUSIP Committee on Uniform Securities Identification Procedures Financial Instruments Securities Identification Code Transactions Record Keeping
The Committee on Uniform Securities Identification Procedures (CUSIP) system uniquely identifies financial instruments and facilitates transactions and record-keeping in the securities industry.
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Definition

CUSIP stands for the Committee on Uniform Securities Identification Procedures. It is a 9-character alphanumeric code issued to North American securities, including stocks, bonds, and mutual funds, to uniquely identify them. The CUSIP number is standardized by the American Bankers Association (ABA) and provided by CUSIP Global Services (CGS), operated by S&P Global Market Intelligence. This identifier enables more efficient clearing and settlement processes, streamlining the trading and record-keeping of securities.

Examples

  1. Apple Inc. (Equity): The CUSIP for Apple Inc. common stock is 037833100.
  2. U.S. Treasury Bonds (Debt): A U.S. Treasury bond with a 10-year maturity might have a CUSIP like 9128285D8.
  3. Vanguard 500 Index Fund (Mutual Fund): The CUSIP for this mutual fund might be 922908108.

Frequently Asked Questions (FAQs)

Q1: What is the purpose of a CUSIP number? A: The CUSIP number uniquely identifies a security and facilitates its trading and settlement in financial markets.

Q2: How many characters does a CUSIP have? A: A CUSIP code consists of 9 alphanumeric characters.

Q3: Who issues CUSIP numbers? A: CUSIP numbers are issued by CUSIP Global Services (CGS), which is operated by S&P Global Market Intelligence and standardized by the American Bankers Association (ABA).

Q4: Are CUSIPs used internationally? A: While primarily used in North America, CUSIPs are also recognized and utilized in various international financial markets.

Q5: Can a single security have multiple CUSIP numbers? A: Generally, each security has a unique CUSIP number. However, a single issuer might have multiple securities, each with its own CUSIP.

  1. ISIN (International Securities Identification Number): A unique 12-character identifier for securities, combining the CUSIP for North American securities or other identifiers for other regions.

  2. Ticker Symbol: A unique code assigned to securities traded on a stock exchange, such as “AAPL” for Apple Inc.

  3. Clearing House: An intermediary institution that facilitates the exchange of securities and ensures the settlement of trades.

  4. Securities and Exchange Commission (SEC): A U.S. regulatory authority overseeing securities markets.

Online References

Suggested Books for Further Studies

  1. “Investing For Dummies” by Eric Tyson
  2. “Security Analysis” by Benjamin Graham and David L. Dodd
  3. “The Intelligent Investor” by Benjamin Graham
  4. “Options, Futures, and Other Derivatives” by John C. Hull

Fundamentals of CUSIP: Finance Basics Quiz

### What does CUSIP stand for? - [x] Committee on Uniform Securities Identification Procedures - [ ] Committee on Uniform Securities Information Provision - [ ] Centralized Unit for Securities Information and Protection - [ ] Council on Universal Securities Identification > **Explanation:** CUSIP stands for Committee on Uniform Securities Identification Procedures, which uniquely identifies securities to facilitate clear trading and settlement. ### How many characters are in a standard CUSIP number? - [ ] 6 - [ ] 7 - [x] 9 - [ ] 10 > **Explanation:** A standard CUSIP number consists of 9 alphanumeric characters, making it unique for identifying securities. ### Which organization operates CUSIP Global Services? - [ ] The Securities and Exchange Commission (SEC) - [x] S&P Global Market Intelligence - [ ] The New York Stock Exchange (NYSE) - [ ] The Federal Reserve > **Explanation:** CUSIP Global Services is operated by S&P Global Market Intelligence. ### What is the primary use of a CUSIP number? - [ ] To calculate stock dividends - [x] To uniquely identify securities for trading and settlement - [ ] To determine exchange rates - [ ] To audit financial reports > **Explanation:** The primary use of a CUSIP number is to uniquely identify securities for trading, settling transactions, and record-keeping. ### Can a CUSIP number be used for international securities? - [x] Yes, but primarily for North American securities - [ ] No, CUSIP numbers are strictly for U.S. companies - [ ] Only for European securities - [ ] Only for Asian securities > **Explanation:** While CUSIP numbers are primarily used for North American securities, they can also be recognized internationally. ### What does a CUSIP number consist of? - [ ] Only numbers - [x] A combination of alphanumeric characters - [ ] Alphabetical characters only - [ ] Special symbols and numbers > **Explanation:** A CUSIP number consists of a combination of 9 alphanumeric characters, ensuring each security's unique identification. ### Which organization standardizes CUSIP numbers? - [x] American Bankers Association (ABA) - [ ] Internal Revenue Service (IRS) - [ ] Financial Accounting Standards Board (FASB) - [ ] International Monetary Fund (IMF) > **Explanation:** The American Bankers Association (ABA) is responsible for standardizing CUSIP numbers. ### Who is typically responsible for using CUSIP numbers? - [ ] Real estate agents - [ ] Marketing professionals - [x] Financial securities traders and regulators - [ ] Human resource managers > **Explanation:** CUSIP numbers are typically used by financial securities traders and regulators for effective trading and settlement. ### Which of the following is NOT identified by a CUSIP? - [ ] Stocks - [ ] Bonds - [x] Foreign currency - [ ] Mutual funds > **Explanation:** Foreign currency is not identified by a CUSIP number; CUSIP numbers are assigned to various securities like stocks, bonds, and mutual funds. ### What facilitates the clearing and settlement process in financial markets? - [ ] Business plans - [x] Unique identification codes like CUSIP - [ ] Marketing strategies - [ ] Insurance policies > **Explanation:** Unique identification codes like CUSIP facilitate the clearing and settlement process in financial markets.

Thank you for delving into the fascinating world of CUSIPs with our detailed overview and practical quiz. Keep exploring to enhance your financial acumen!

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