A:

CUSIP stands for Committee on Uniform Securities Identification Procedures. Formed in 1962, this committee developed a system (implemented in 1967) that identifies securities, specifically U.S. and Canadian registered stocks, and U.S. government and municipal bonds.

The CUSIP number consists of a combination of nine characters, both letters and numbers, which act as a sort of DNA for the security - uniquely identifying the company or issuer and the type of security. The first six characters identify the issuer and are assigned in an alphabetical fashion; the seventh and eighth characters (which can be alphabetical or numerical) identify the type of issue; and the last digit is used as a check digit.

The CUSIP Service Bureau is operated by Standard & Poor's on behalf of the American Bankers Association (ABA). When setting out to develop the CUSIP system of identification, the ABA basically had two main criteria it was trying to meet. First, it wanted the identification to contain the fewest number of characters possible and to be linked to an alphabetical sequence of issuer names. Secondly, it recognized that the system should be adequate given the current operating requirements while having the flexibility to adapt to any future needs or changes in the operating systems. For more information on the CUSIP system, visit Standard & Poor's CUSIP Service Bureau.

To learn more about CUSIPs, see Old Stock Certificates: Lost Treasure Or Wallpaper? and How do I find the CUSIP number for a particular stock?

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