A CUSIP number is the primary unique identifier used for US bonds. There are CUSIP numbers for most US traded securities. However, the CUSIP number has primary importance in the bond market, where it is used to process and settle trades. [vimeo]https://vimeo.com/50149502[/vimeo]
Where most stocks have a 3 or 4 letter ticker symbol to identify them (ie AAPL for Apple stock or BAC for Bank of America), the bond market uses the 9 Character CUSIP Number.
Why Bonds need CUSIP Numbers
As of January 2015, there are approximately 5,500 publicly traded companies in the U.S. While some of those companies offer several types of stock (preferred, common), it is very unusual for a company to have more than 3 classes of stock. At most, there are 20,000 unique stock issues of publicly traded companies. There are well over 1,000,000 different bond issues. Most of these bond issues are municipal bonds issued by cities, counties, and states. With so many different bond issues, precise identification is critical.
There are three parts to a CUSIP Number
Example: 912828 + NB + 2 would be 912828NB2 CUSIP #
- The First 6 digits (912828) identify the issuer. In this case, the issuer is the Treasury Department.
- The next two characters (NB) identifies the specific bond.
- The last digit (2) has no significance in identifying the bond. Its computed using the first six digits and serves as a check that the CUSIP number has not been corrupted in some fashion.
How do you search for or look up a CUSIP number?
Having a CUSIP number in most cases is critical to finding information on a particular bond. If you own a bond, your broker should be able to provide the CUSIP number. If you are looking for information on a bond you do not already own and don’t know the CUSIP number, Fidelity has a nice tool here that will allow you to search for it using other criteria.
What does CUSIP Stand For?
CUSIP is the acronym for the Committee on Uniform Security Identification Procedures. It is a system for identifying securities which was started in 1964. The system is owned by the American Bankers Association, and CUSIP is administered by Standard and Poors. For more information on individual bonds, visit our Free Guide to Investing in Corporate Bonds.