CUSIP is an acronym for Committee on Uniform Securities Identification Procedures. A CUSIP number is an identifying number for most of the financial securities in the United States and Canada. The following guidelines explain what a CUSIP number is and how it’s identified.
Understanding CUSIP Numbers
CUSIP numbers consists of a combination of nine letters and numbers that act as a DNA security system to uniquely identify the type of security and its identifying issuer or company, according to the ISIN Network. When you look at the first six characters, you can identify the issuer. The seventh and eighth alpha or numerical characters identify what type of security you’re viewing. The very last character is used as a digit check.
Why Do Some Investments Omit CUSIP Numbers?
When you start investing, you’ll notice that not all investments have CUSIP numbers. For example, Investopedia states that hedge funds won’t have CUSIP numbers. The main reason is that these are private investments. CUSIP numbers are used to identify securities that are primarily used on investments that are for public sale. You might find these investment securities on the New York Stock Exchange, for example. But hedge funds are typically privately held investments structured as LLCs (limited liability companies) or LLPs (limited liability partnerships). These types of investments are offered to a limited number of qualified or accredited investors, so they don’t include CUSIP numbers. Hedge funds, unlike public investments, also require the investor to sign a disclosure document.
How to Look Up Information About a CUSIP Number
When you’re ready to begin your research, it’s helpful to have as much information available as possible. There are four ways to look up a CUSIP number’s information, according to the U.S. Securities and Exchange Commission. You can research the CUSIP number’s funding information using the security’s full name, it’s trading symbol, the fund number or the CUSIP number. If you don’t know the CUSIP number, there’s a quick look-up tool available through Fidelity Investments where you can find a CUSIP number, as well as the trading symbol or fund number. Another excellent resource is KennyWeb by Standard and Poor. Sallie Mae is also an excellent resource for finding CUSIP numbers, as well as related funding information.
About Purchasing Investments
It’s possible for any investor who has a brokerage account to purchase CUSIP bonds, closed-end funds, EFTs sold on public exchanges and stocks. Companies must follow various regulations that deal with disclosing financial statements, information, risks and business strategies in a competitive market, according to the Municipal Securities Rulemaking Board.
Why Were CUSIP Numbers Invented?
The main reason CUSIP numbers came into being was to make the clearing processes and market transitions more efficient, according to Investopedia. The purpose of the CUSIP number was to develop a standardized way of identifying financial instruments uniquely. Because private investments require neither clearing nor public transactions, they do not require CUSIP numbers.