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?

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