How does the ISIN numbering system work?

By Matt Lee AAA
A:

The International Securities Identification Numbering (ISIN) system is an international standard set up by the International Organization for Standardization (ISO). It is used for numbering specific securities, such as stock, bonds, options and futures. ISIN numbers are administered by a National Numbering Agency (NNA) in each of their respective countries, and they work just like serial numbers for those securities.

An ISIN code has 12 characters in total, which are alphanumeric, and is structured to include the country in which the issuing company is headquartered, the specific security identification number and a final character acting as a check. The first two digits are reserved for the country of origin for the security (the head office of the issuing company). The second grouping, which is nine characters long, is reserved for the actual unique identifying number for the security. The final digit, which is called a check digit, ensures the code's authenticity and prevents errors.

The middle nine digits of the ISIN system number is administered by the appropriate NNA, which is called the CUSIP Service Bureau in the United States. This office was created to improve the numbering system for securities by making a country-wide standard for the financial industry. The CUSIP Service Bureau was first established in 1964, and it continues to enforce its numbering system by way of a board of trustees.

The ISIN formula, which is complex, is currently computed by computers and helps to protect against counterfeiting and forgery. For example, assume that a company from the U.S. issues a stock certificate for its stock. The ISIN number could look like this: US-000402625-0 (dashes added for simplicity). The country code, "US", is at the beginning, followed by the nine-digit CUSIP number for the specific security itself, with the last digit acting as the check digit.

To learn more about how an ISIN number could benefit you, read Old Stock Certificates: Lost Treasure Or Wallpaper?

RELATED FAQS

  1. What strategies are used in a redemption mechanism?

    Find out how the ETF redemption mechanism works and how authorized participants arbitrage ETF shares to bring them in line ...
  2. For investors, what are the alternatives to owning physical gold?

    Learn some of the primary alternate ways that someone can invest in the gold market besides simply purchasing physical gold ...
  3. Is the average return on small cap companies better than large cap companies?

    Learn the difference between small-cap and large-cap companies, and find out which type of company is likely to yield a higher ...
  4. What does it require for a company to become a blue-chip company?

    Learn how blue-chip companies have established prestige and solid reputations by remaining strong and adapting during difficult ...
RELATED TERMS
  1. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  2. Acquisition

    A corporate action in which a company buys most, if not all, ...
  3. International Finance Corporation

    The International Finance Corporation is an organization dedicated ...
  4. International Finance

    Definition of international finance
  5. Bidder

    The party offering to buy an asset from a seller at a specific ...
  6. Multibank Holding Company

    A company that owns or controls two or more banks. Mutlibank ...

You May Also Like

Related Articles
  1. Options & Futures

    Give Yourself More Options With Real ...

  2. Options & Futures

    The Future Is Now: All About Futures ...

  3. Stock Analysis

    The World's Top Ten News Companies

  4. Options & Futures

    How To Protect A Short Position With ...

  5. Investing Basics

    Why did Berkshire Hathaway create Class ...

Trading Center