Security Identification
International Securities Identification Number (ISIN)
• An International Securities Identification Number (ISIN) uniquely identifies a security. Its structure is defined in ISO 6166. Securities for which ISINs are issued include bonds, commercial paper, equities and warrants. The ISIN code is a 12-character alpha-numerical code that does not contain information characterizing financial instruments but serves for uniform identification of a security at trading and settlement.
• Securities with which ISINs can be used include debt securities, shares, options, derivatives and futures. The ISIN identifies the security, not the exchange (if any) on which it trades; it is not a ticker symbol. For instance, Daimler AG stock trades on twenty-two different stock exchanges worldwide, and is priced in five different currencies; it has the same ISIN on each, though not the same ticker symbol. ISIN cannot specify a particular trading location in this case, and another identifier, typically MIC(Market Identification Code) or the three-letter exchange code, will have to be specified in addition to the ISIN. The SEDOL board of the London Stock Exchange has revised their own standards to address this issue.
Procedure
• An ISIN consists of three parts: Generally, a two letter country code, a nine character alpha-numeric national security identifier, and a single check digit. The country code is the ISO 3166-1 alpha-2 code for the country of issue, which is not necessarily the country in which the issuing company is domiciled. International securities cleared through Clearstream or Euroclear, which are Europe-wide, use "XS" as the country code.
• The nine-digit security identifier is the National Securities Identifying Number, or NSIN, assigned by governing bodies in each country, known as the national numbering agency (NNA). In North America the NNA is the CUSIP organization, meaning that CUSIPs can easily be converted into ISINs by adding the US or CA country code to the beginning of the existing CUSIP code and adding an additional check digit at the end. In the United Kingdom and Ireland the NNA is the London Stock Exchange and the NSIN is the SEDOL, converted in a similar fashion after padding the SEDOL number out with leading zeros. Most other countries use similar conversions, but if no country NNA exists then regional NNAs are used instead.
• ISINs are slowly being introduced worldwide. At present, many countries have adopted ISINs as a secondary measure of identifying securities, but as of yet only some of those countries have moved to using ISINs as their primary means of identifying securities.
Example (1)
• Apple Inc.: ISIN US0378331005, expanded from CUSIP 037833100 The main body of the ISIN is the original CUSIP, assigned in the 1970s. The country code "US" has been added on the front, and an additional check digit at the end. The country code indicates the country the issuer is Domiciled. The check digit is calculated in this way...
• Convert any letters to numbers:
• U = 30, S = 28. US037833100 -> 3028037833100.
• Collect odd and even characters:
• 3028037833100 = (3, 2, 0, 7, 3, 1, 0), (0, 8, 3, 8, 3, 0)
• Multiply the group containing the rightmost character (which is the FIRST group) by 2:
• (6, 4, 0, 14, 6, 2, 0)
• Add up the individual digits:
• (6 + 4 + 0 + (1 + 4) + 6 + 2 + 0) + (0 + 8 + 3 + 8 + 3 + 0) = 45
• Take the 10s modulus of the sum:
• 45 mod 10 = 5
• Subtract from 10:
• 10 - 5 = 5
• Take the 10s modulus of the result (this final step is important in the instance where the modulus of the sum is 0, as the resulting check digit would be 10).
• 5 mod 10 = 5
• So the ISIN check digit is five.
Example (2)
• TREASURY CORP VICTORIA 5 3/4% 2005-2016: ISIN AU0000XVGZA3
• Convert any letters to numbers:
• A = 10, G = 16, U = 30, V = 31, X = 33, Z = 35. AU0000XVGZA -> 103000003331163510.
• Collect odd and even characters:
• 103000003331163510 = (1, 3, 0, 0, 3, 3, 1, 3, 1), (0, 0, 0, 0, 3, 1, 6, 5, 0)
• Multiply the group containing the rightmost character (which is the SECOND group) by 2:
• (0, 0, 0, 0, 6, 2, 12, 10, 0)
• Add up the individual digits:
• (1 + 3 + 0 + 0 + 3 + 3 + 1 + 3 + 1) + (0 + 0 + 0 + 0 + 6 + 2 + (1 + 2) + (1 + 0) + 0) = 27
• Take the 10s modulus of the sum:
• 27 mod 10 = 7
• Subtract from 10:
• 10 - 7 = 3
• Take the 10s modulus of the result (this final step is important in the instance where the modulus of the sum is 0, as the resulting check digit would be 10).
• 3 mod 10 = 3
• So the ISIN check digit is three.
Conversion table
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Conversion table for characters is :
A = 10 F = 15 K = 20 P = 25 U = 30 Z = 35
B = 11 G = 16 L = 21 Q = 26 V = 31
C = 12 H = 17 M = 22 R = 27 W = 32
D = 13 I = 18 N = 23 S = 28 X = 33
E = 14 J = 19 O = 24 T = 29 Y = 34
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BAE Systems: ISIN GB0002634946, expanded from SEDOL 0263494
The main body is the SEDOL, padded on the front with the addition of two zeros. The country code "GB" is then added on the front, and the check digit on the end as in the example above.
CUSIP
• The acronym CUSIP historically refers to the Committee on Uniform Security Identification Procedures, which was founded in 1964, during the paper crunch in Wall Street. This 9-character alphanumeric code identifies any North American security for the purposes of facilitating clearing and settlement of trades. The CUSIP distribution system is owned by the American Bankers Association and is operated by Standard & Poor's. The CUSIP Service Bureau acts as the National Numbering Association (NNA) for North America, and the CUSIP serves as the National Securities Identification Number for products issued from both the United States and Canada.
• In the 1980s there was an attempt to expand the CUSIP system for international securities as well. The resulting CINS (CUSIP International Numbering System) has seen little use as it was introduced at about the same time as the truly international ISIN system. CINS identifiers do appear in the ISIDPlus directory
Procedure
• Description The first six characters are known as the base (or CUSIP-6), and uniquely identify the issuer. Issuer codes are assigned alphabetically from a series that includes deliberate built-in "gaps" for future expansion. The 7th and 8th digit identify the exact issue. The 9th digit is an automatically generated checksum (some clearing bodies ignore or truncate the last digit). The last three characters of the issuer code can be letters, in order to provide more room for expansion.
• Issuer numbers 990 to 999 and 99A to 99Z in each group of 1,000 numbers are reserved for internal use. This permits a user to assign an issuer number to any issuer which might be relevant to his holdings but which does not qualify for coverage under the CUSIP numbering system. Other issuer numbers (990000 to 999999 and 99000A to 99999Z) are also reserved for the user so that they may be assigned to non-security assets or to number miscellaneous internal assets.
• The 7th and 8th digit identify the exact issue, the format being dependent on the type of security. In general, numbers are used for equities and letters are used for fixed income. For commercial paper the first issue character is generated by taking the letter code of the maturity month, the second issue character is the day of the maturity date, with letters used for numbers over 9. The first security issued by any particular issuer is numbered "10". Newer issues are numbered by adding ten to the last used number up to 80, at which point the next issue is "88" and then goes down by tens. The issue number "01" is used to label all options on equities from that issuer.
• Fixed income issues are labeled using a similar fashion, but due to there being so many of them they use letters instead of digits. The first issue is labeled "AA", the next "A2", then "2A" and onto "A3". To avoid confusion, the letters I and O are not used since they might be mistaken for the digits 1 and 0.
• The 9th digit is an automatically generated check digit using the "Modulus 10 Double Add Double" technique. To calculate the check digit every second digit is multiplied by two. Letters are converted to numbers based on their ordinal position in the alphabet.
Code
Input: an 8-character CUSIP
Output: the check digit for that CUSIP
sum := 0
for 1 ≤ i ≤ 8 do
c := the ith character of cusip
if c is a digit then
v := numeric value of the digit c
else if c is a letter then
p := ordinal position of c in the alphabet (A=1, B=2...)
v := p + 9
else if c = "*" then
v := 36
else if c = "@" then
v := 37
else if c = "#" then
v := 38
end if
if i is even then
v := v × 2
end if
sum := sum + v div 10 + v mod 10
repeat
return (10 - (sum mod 10)) mod 10
Outlook
• Antitrust Review In November 2009, ten months after launching an investigation, the European Commission formally charged Standard & Poor’s with abusing its position as the sole provider of CUSIP international securities identification codes for U.S. securities by requiring European financial firms and data vendors to pay licensing fees for their use. “This behavior amounts to unfair pricing,” the European Commission said in its statement of objections which lays the groundwork for an adverse finding against S&P. “The (numbers) are indispensable for a number of operations that financial institutions carry out – for instance, reporting to authorities or clearing and settlement – and cannot be substituted.”
• S&P has run the CUSIP Service Bureau, the only ISIN issuer in the US, on behalf of the American Bankers Association. In its formal statement of objections, the European Commission alleges that S&P is abusing this monopoly position by forcing financial services companies and information service providers to pay licence fees for the use of US ISINs. It claims that comparable agencies elsewhere in the world either do not charge fees at all, or do so on the basis of distribution cost, rather than usage.
SEDOL
• SEDOL stands for Stock Exchange Daily Official List, a list of security identifiers used in the United Kingdom and Ireland for clearing purposes. The numbers are assigned by the London Stock Exchange, on request by the security issuer. SEDOLs serve as the National Securities Identifying Number for all securities issued in the United Kingdom and are therefore part of the security's ISIN as well. The SEDOL Masterfile (SMF) provides reference data on millions of global multi-asset securities each uniquely identified at the market level using a universal SEDOL code
Procedure
• SEDOLs are seven characters in length, consisting of two parts: a six-place alphanumeric code and a trailing check digit. SEDOLs issued prior to January 26, 2004 were composed only of numbers. For those older SEDOLs, those from Asia and Africa typically begin with 6, those from the UK and Ireland (until Ireland joined the EU) typically begin with 0 or 3 those from Europe typically began with 4, 5 or 7 and those from the Americas began with 2. After January 26, 2004, SEDOLs were changed to be alpha-numeric and are issued sequentially, beginning with B000009. At each character position numbers precede letters and vowels are never used. All new SEDOLs, therefore, begin with a letter. Ranges beginning with 9 are reserved for end user allocation.
• The check digit for a SEDOL is chosen to make the total weighted sum of all seven characters a multiple of 10. The check digit is computed using a weighted sum of the first six characters. Letters have the value of 9 plus their alphabet position, such that B = 11 and Z = 35. While vowels are never used in SEDOLs, they are not ignored when computing this weighted sum (e.g. H = 17 and J = 19, even though I is not used), simplifying code to compute this sum. The resulting string of numbers is then multiplied by the weighting factor as follows:
First 1
Second 3
Third 1
Fourth 7
Fifth 3
Sixth 9
Seventh 1 (the check digit)
• The character values are multiplied by the weights. The check digit is chosen to make the total sum, including the check digit, a multiple of 10, which can be calculated from the weighted sum of the first six characters as (10 − (weighted sum modulo 10)) modulo 10.
• For British and Irish securities, SEDOLs are converted to ISINs by padding the front with two zeros, then adding the country code on the front and the ISIN check digit at the end.
Code
JavaScript codes for validating SEDOLs Code:
Modified from http://rosettacode.org/wiki/SEDOLs
function checkSedol(text){
var weight = [1, 3, 1, 7, 3, 9, 1];
try{
var input = text.substr(0,6);
var check_digit = sedol_check_digit(input);
if( text == input + check_digit){
return true;
}else{
return false;
}
}catch(e){
return false;
}
return false;
function sedol_check_digit(char6) {
if (char6.search(/^[0-9BCDFGHJKLMNPQRSTVWXYZ]{6}$/) == -1){
throw "Invalid SEDOL number '" + char6 + "'";
}
var chars = char6.split('');
var sum = 0;
for (var i in chars){
sum += weight[i] * char_to_value(chars[i]);
}
var check = (10 - sum%10) % 10;
return check.toString();
}
function char_to_value(ch) {
var val = ch.charCodeAt(0);
if (48 <= val && val <= 57)
return val - 48;
else
return val - 65 + 10;
}
}
BAE System
Exampl eBAE Systems: 0263494
The checksum can be calculated by multiplying the first six digits by their weightings:
(0×1, 2×3, 6×1, 3×7, 4×3, 9×9) = (0, 6, 6, 21, 12, 81)
Then summing up the results:
0 + 6 + 6 + 21 + 12 + 81 = 126
The check digit is then calculated by:
(10 − (126 modulo 10)) = (10 − 6) = 4
Exchange Traded derivative
Exchange- traded derivative contract are standardized derivative contract (e.g. Future contracts and options) that are transacted on an organized future exchanges. These contract include futures, call and put. Part of the name of these contract always reflect on which date the contract expire. For example, a future PQR expiring in Sep11 will be called PQRU11. A call option PQR expiring in Sep11 will be called PQRI11C. A Put (P) option of same asset expiring Sep11 will be called PQRU11P.
Table
Table
Month | Call | Put | Futures |
January | A | M | F |
February | B | N | G |
March | C | O | H |
April | D | P | J |
May | E | Q | K |
June | F | R | M |
July | G | S | N |
August | H | T | Q |
September | I | U | U |
October | J | V | V |
November | K | W | X |
December | L | X | Z |
Pari passu
Pari passu is a Latin phrase that literally means "with an equal step" or "on equal footing." It is sometimes translated as "ranking equally", "hand-in-hand," "with equal force," or "moving together," and by extension, "fairly," "without partiality."
passu is the ablative of the Latin noun passus, "step"
pari is the ablative singular masculine (since it must grammatically agree with passu) of the adjective par, "equal". If it was nominative, "an equal step" it would simply be par passus.
In law, this term is commonly used jargon. Black's Law Dictionary (8th ed., 2004) defines pari passu as "proportionally; at an equal pace; without preference."
In inheritance, an in pari passu distribution can be distinguished from a per stirpes distribution. For example, suppose a testator had two children A and B. A has 2 children, and B has 3. The testator leaves his entire estate to his grandchildren in equal shares in pari passu, each grandchild would inherit one fifth of the estate. If the testator left his entire estate to his grandchildren per stirpes, the children of A would share one half of the estate equally between the two of them, and the children of B would share one half of the estate equally between the three of them. The problem with an in pari passu distribution in the example given is that, let's assume A dies before B. On A's death a distribution could not be made to his or her children: they would have to await the death of B (B may have more children after A's death) before the share of the estate they are to take could be determined.
In finance, this term refers to two or more loans, bonds, classes of shares having equal rights of payment or level of seniority. For asset management firms, the term denotes an equal allotment of trades to strategically identical funds or managed accounts.
This term is also often used in bankruptcy proceedings where creditors are said to be paid pari passu, or each creditor is paid pro rata in accordance with the amount of his claim. Here its meaning is "equally and without preference."
There have been cases where differences in interpretation of what pari passu means.
