What Is a CUSIP Number for a Treasury Bond?
A Committee on Uniform Securities Identification Procedures (CUSIP) number is a nine-character identifier used to track the issuer and type of security when settling transactions. CUSIP numbers are used on U.S. Treasury bonds, municipal bonds, corporate bonds and stocks of U.S. and Canadian companies. The CUSIP system is operated by Standard & Poor's through CUSIP Global Services and owned by the American Bankers Association and Avox Limited.
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CUSIP Identifier
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The nine characters (letters and numbers) of the CUSIP number identify a specific financial instrument. The first six characters identify the company, municipality or government agency that issued the security. The next two characters of the CUSIP number identify the type of instrument (debt or equity), and the last character is derived from a mathematical formula checking the accuracy of the previous eight characters.
U.S. Treasury Bonds
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U.S. Treasury bonds have maturities greater than 10 years (usually 30 years) from the date of issue and pay interest every six months. Treasury bonds are payable for their face value at maturity, but the secondary market for U.S. Treasury bonds is highly liquid, allowing bonds to be sold long before their maturity. The U.S. Treasury auctions these bonds every quarter with re-openings of the issue in the intervening months. The re-opened securities have the same maturity date, coupon interest rate and interest payment dates as the original security, differing only in issue date and usually in price.
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Treasury Bond CUSIP
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U.S. Treasury bonds are assigned a unique CUSIP number at each auction. When the bonds are bought or sold, these CUSIP numbers allow the transaction to be easily processed and cleared. Additionally, secondary market bond prices are easily found by using the CUSIP number of the bond.
Scams
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The U.S. Treasury Department has warned of a number of scams originating overseas that offer to lease U.S. Treasury and other securities. The CUSIP number is sometimes included in the scam to allow the target to research and verify the security's existence. The CUSIP number simply identifies a particular security. The CUSIP number for a security is public information and does not provide evidence of ownership. If 10,000 bonds belong to a particular issue, they will all have the same CUSIP, though this CUSIP will differ from the bonds of other issues.
CUSIP International Numbering System
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The effectiveness of the CUSIP system led to a demand for expansion of the system internationally. The CUSIP International Numbering System (CGS CINS) provides a CUSIP-like numbering system for overseas debt and equity instruments and is also operated by CUSIP Global Services. The primary difference between the two systems is the inclusion of a letter in the first position of the CGS CINS number to indicate the geographic area of the issuer.
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