Assignment
International Securities Identification Number (ISIN) Assignment
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The ISIN Number Code is used in nearly 100 countries to identify both equity and debt securities issues, derivatives, syndicated loans and equity options, as well as stocks, bonds, treasuries, commercial paper, medium terms notes, warrants, rights, trusts, futures, options and more.
The ultimate goal of international identification codes referred to as “ISIN” (International Securities Identification Number) is to standardize the identification of securities and other financial instruments via a unified system and a uniform classification.
Said another way, ISIN numbers are allocated to securities, much like a social security number for a person, in order to clearly show or state what the securities details are, and to assist in the clearing and settlement procedures between potential buyer and seller.
ISINs – as opposed to the 9 digit CUSIP numbers – are composed of a 12 digit alphanumeric number code. The ISINs are also a solid tool in the unification for varying ticker symbols (think “APPL” for Apple, Inc.). Ticker symbols can vary from exchange to exchange, which only causes confusion, especially when currency is taken into consideration. Thus, a ticker symbol for a US security traded on the NASDAQ may be different on other Stock Exchanges. Therefore, an ISIN number can actually ‘unify’ all ticker symbols of the securities, enabling those searching for the securities to see an all-inclusive picture of the securities being searched.
For the United States, ISIN codes are extended versions of the 9-character CUSIP (Committee on Uniform Security Identification Procedures) numbers. ISIN numbers are formed by adding a country code and what is called a “check digit” to the beginning of the CUSIP, and end of a CUSIP numbers.
ISIN Code Structure
There are several key components to an ISIN Number Code as exemplified by the following ISIN code sample: US123456789 (or the three parts as US-12345678-9). The ISIN code can be explained as follows:
- A two-letter country code (such as the “US”), drawn from the International Organization for Standardization, or “ISO”, (ISO 6166). This two letter word code is allocated to the company’s home country or in most cases where the company is domiciled in or may have a corporate headquarter base. For the United States, this is “US”, while, for example, Mexico would be “ME”.
- The second aspect of this 12 ISIN digit code is a 9 digit (always numbers) that is classified as an “identifier”. This identifier is referred to as the National Securities Identifying Number “NSIN”), and is allocated by the specific nation or region, referred to as the National Numbering Agency, or “NNA”. If less than nine digits of the code make up the composition, zeros are added to them, which assist in creating the “NSIN”. As in most cases with such numbers, there is no specific ones that are chosen, but often are concocted randomly through various mathematical algorithm. As noted elsewhere, these identifiers are similar to a social security number for a person, where various ‘life’ information can be found, or in the case of a security, assets of the company an securities.
- The final number of the ISIN code is called a “single check-digit”, and is derived from the foregoing 11 characters or digits and uses what is called a “sum modulo 10 algorithm”. The main reason for this is to counter against illegal copying or counterfeit numbers.
- Euroclear ISIN number: A special alpha numeric code, referred to as “XS”, is employed by various Euroclear agencies that have the power to issue ISIN numbers. The most well know of these ISIN allocators is Euroclear, Clearstream and CEDEL, all of which are clearing firms unto itself and are permitted to grant ISIN numbers. This Euro “XS” is employed for international securities that clear through Euroclear, Clearstream, CEDEL, etc. Such depository receipt ISIN employment is exclusive in that the country code for the security is that of the receipt issuer, not that of the underlying security that one may decide to sell or buy.
ISIN Assignment Usage
At one time, International Securities Identification Numbers, or ISINs, were considered a secondary form of security identification – as opposed to ticker symbols which were not primary. In the early years of the ISIN introduction, ISIN number codes were mainly used for clearing and settlement. However, in the last decade numerous European nations have adopted the ISIN code formula as their primary security identifier, surpassing even ticker symbols as primary use. ISIN numbers are also employed in North America, as they are built upon CUSIP numbers (click here to read more about “CUSIP” numbers). As the years move on and as more securities are constantly being issued worldwide, many countries, aside from the nearly 100 that already utilize ISIN numbers, most countries seem open to adopting ISIN’s as their primary security identifies, or at the very least, as a secondary adoption. In regions or countries that do not have a “NNA”, three neighboring individual NNAs work together to administer ISINs.
Why Should All Adopt ISIN Codes?
The main reason for worldwide adoption of the use of ISIN numbers is to create a clear and transparent method for clearing and settlement via a global straight-through processing or “GSTP”. The GSTP essentially seeks to clear and settle transactions only electronically, without having to rely on any manual or human interaction. ISIN numbers are employed by share custodians to track holdings of institutional investors in a format which is consistent across markets worldwide. In the future, it is assumed that the entire planets clearing and treading platforms will rely solely on ISIN number codes as the sole means of securities identification.
History of ISIN Number Codes
International Securities Identification Numbers were first employed in 1981. At that point it had not reached wide global acceptance until 1989, when the G30 countries recommended ISIN adoption. In 1990, the Association of National Numbering Agencies, or “ANNA”, was formed and endorsed by the International Organization for Standardization, or “ISO”. The Global ISIN Access Mechanism was developed in 1994 to facilitate the electronic exchange of ISIN information across the different National Number Agencies “NNA” and today shares wide popularity throughout the world.
ANNA, the Association of National Numbering Agencies, has been commission with the implementation and availability of ISIN numbers throughout the world. To further this goal, ANNA has created an information exchange process called “GIAM-2”, which uses the Internet and CD-ROM technologies to achieve its goals.
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