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CUSIP

Before we get into the discussion of buying and selling bonds, let’s discuss in more detail a prevalent naming convention for them (as well as many other types of securities). In the financial world just about all instruments have associated symbols. Symbols allow for a quicker reference to a certain financial instrument and also help reduce possible errors when trading them by increasing clarity.Many of us are familiar with stock symbols, for example GE for General Electric, F for Ford, and MSFT for Microsoft. There is, however, a universal symbol system used by banks and other financial institutions to handle transactions for many types of financial instruments. It is known as the CUSIP (Committee on Uniform Security Identification Procedures) number.

CUSIP is basically a numbering system which uniquely identifies many types of securities. Ultimately CUSIP is used to facilitate the accurate and efficient transactions and tracking of securities in the financial industry. The CUSIP system is operated by Standard & Poor’s (a division of McGraw-Hill) for the American Bankers Association (ABA), which originally developed it. CUSIP numbers cover many securities such as CDs, stocks, mutual funds, and of course bonds. CUSIP numbers are nine characters long, and for international securities special CUSIP numbers known as CINS (CUSIP International Numbering System) numbers are used. Some examples of CUSIP numbers are: GE stock: 369604103, Ford stock: 345370100, Vanguard Asset Allocation Fund: 922020102, and 30-year Treasury bond maturing on 11/15/2009: 912810DJ4.

While many types of securities are referred to by their ordinary symbols (such as ticker symbols for stocks), CUSIP numbers are mainly used when trading bonds as bonds do not have standard symbols of their own. …