CUSIP numbers are used by the financial industry to positively identify which securities are being bought, sold and held in investor accounts. The CUSIP ensures that if you and your broker are discussing the U.S. Treasury bond with the 3 percent coupon maturing in May 2042, you both are talking about the same security.
TL;DR (Too Long; Didn't Read)
A CUSIP number has nine digits and serves as an identification number for a security like a Treasury Bond. This number starts with 912928 for Treasury Bonds.
What Is CUSIP?
CUSIP Global Services – CGS – is a numbering system owned by the American Bankers Association, which provides a distinct number for almost every security that can be bought or sold in the U.S. and Canada. According to the CGS website, there are CUSIP numbers for over 44 million financial instruments.
The financial services industry relies on CUSIP numbers to accurately track securities transactions. If you buy a Treasury bond through your broker, she will enter the trade into the brokerage system using the CUSIP number. CUSIP, which stands for Committee on Uniform Security Identification Procedures, is ingrained into the jargon of the financial services industry.
Understanding CUSIP Numbers
A CUSIP number is nine digits long, made up of letters or numbers. These numbers are commonly used to identify bonds the way ticker symbols identify stocks.
The first six digits identify the issuer of a security. The six-digit identifier for the U.S. Treasury is 912928. The next two digits identify the specific security, and the final – ninth – digit is a checksum digit computed from the first eight digits by a computer algorithm. As an example, a two-year Treasury note issued in April 2018 has a CUSIP number of 9128284J6.
Treasury CUSIP Numbers
The CUSIP number for a specific Treasury bond can be located on the TreasuryDirect.gov website. The website provides a search function to find specific bond issues by auction date, issue date, maturity date or CUSIP number. The search page can be found in the institutional side of the TreasuryDirect website under the Announcements, Data & Results menu tab. Select Auction Query from the side menu to find the search page.
Importance of Treasury CUSIP
The U.S. Department of the Treasury sells securities, holding auctions every day of the week. An auction may be for a new issue or the reopening of an older bond issue. Using the CUSIP numbers is the best way to keep track of which Treasury securities were bought, sold or traded. If you're a regular investor in Treasury securities, keep a list of the CUSIP numbers for your bonds to ensure clear communication with your broker.
Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.