| DEFINITION: A CUSIP number is a unique nine-character number assigned to a particular US or Canadian financial instrument such as a stock, bond, mutual fund, or commercial paper. |
In the case of US securities…
CUSIP stands for Committee on Uniform Securities Identification Procedures, which is a system owned by the American Bankers Association and managed by Standard & Poor’s. This system assigns a unique number to every registered security that’s issued by a US or Canadian company, as well as those issued by the US government and other government entities.
The first six digits of the code represent the security’s issuer, the next two identify the type of security, and the final digit serves as a check digit. CUSIP numbers were established in the 1960s as a way to identify financial instruments.
| EXAMPLE: New York City is a major issuer of bonds, and uses them to finance various infrastructure projects, including schools, roads, bridges, water systems, and more. One of NYC’s bonds — the New York City Transitional Finance Authority Revenue Subordinated Future Tax Secured Subordinated Series C 1 — has a CUSIP of 64971XKK3. The first six digits — 64971X — identify the issuing government entity. The next digits — KK — identify the type of security, which in this case, is a revenue bond. Finally, the final digit is a check digit to ensure the accuracy of the CUSIP number. If NYC were to issue another type of bond, the CUSIP would start with the same six digits, but the last three digits may be different to identify the specific security. |
What’s important here?
CUSIP numbers can be used by investors, analysts, and more to identify a particular security. Think of it like a Social Security number, but for an asset instead of a person. Each security’s CUSIP number is publicly available. For municipality’s you can usually find it listed through the MSRB’s Electronic Municipal Market Access system (EMMA).
These numbers can be useful when placing buy orders, so investors can ensure they’re purchasing the correct municipal bond or a similar security through their brokerage firm. That being said, most individual investors won’t find themselves using CUSIP numbers. They are more important for brokers and clearing firms involved in trading that use these numbers to facilitate transactions.