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What is a CUSIP Number and Why are CUSIPs Important?

May 9, 2017

 

Back in mid-April when Fundamental Applications Corp. (CSE:FUN) changed its name and ticker to Global Cannabis Applications Corp. (CSE:APP), the company also got a new CUSIP number. More recently, when Maricann Group Inc. (CSE:MARI) was approved for trading on the CSE, shares were assigned a CUSIP. While we've mentioned CUSIPs numerous times, we have yet to educate readers on what a CUSIP even is.

 

What is a CUSIP?

 

A CUSIP consists of nine alphanumeric characters that uniquely identify a company or issuer and the type of financial instrument. According to the SEC, a CUSIP number identifies most financial instruments, including: stocks of all registered U.S. and Canadian companies, commercial paper, as well as U.S. government and municipal bonds.

 

Where Did CUSIPs Come From?

 

The Committee on Uniform Securities Identification Procedures ("CUSIP") system was born in 1968 after the "New York Clearing House Association approached the American Bankers Association to develop a way to improve operating efficiencies across the industry by developing a standard method of identifying securities."

 

The CUSIP system is owned by the American Bankers Association and managed by Standard & Poor’s to facilitate the clearance and settlement process of securities.

 

What Can Investors Learn From CUSIPs?

 

CUSIP issuances are an interesting bit of data for investors to keep track of, as the number of new CUSIPs can be used "as an early indicator of debt and capital markets activity."

 

In late April, CUSIP Global Services announced that "demand for new CUSIPs for both corporate debt and equity offerings are up considerably over 2016 totals. For Q1, domestic equity CUSIP volume is up 70% and domestic debt CUSIP volume is up 26% over the same time period in 2016."

 

Essentially, more new CUSIPs = more new securities being issued. 

 

 

D/M/O

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