ISIN

ISIN

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ISIN codes are utilized around the world by companies and funds that wish to identify their securities by some type of identification code. An ISIN number is a twelve character, alpha numeric code that, within, has been designed to distinctly place, ISIN or international securities identification number, within a certain structure. ISINs are employed by hedge funds and ‘regular’ funds and unit trusts, as well as by private corporation and those seeking to go public. They often apply for an ISIN. ISINs are the one common denominator securities identifier used worldwide. ISINs are issued to both debt and equity.

Many ask, why get an ISIN number? The main purpose of an ISIN number is to identify a security. This is important for many reasons but two stand out: the first is because a company many have issued numerous share classes, such as Class A, Class B, etc. (think Google or Microsoft, both have hundreds of issued securities). Thus, to distinguish between the various classes – and this is most important for funds and hedge funds – the ISIN is employed. This way investors, and the company itself, will not be confused by the various classes of shares and its various terms. This is also true for debt securities such as notes and bonds. To distinguish between various tranches or series of notes, an ISIN is often used.

Finally, for clearing and settlement purposes ISINs are used worldwide. Similar to other identifiers like CUSIP or SEDOL or VALOR numbers, ISINs are doubly important for the clearing and settlement of transactions.

Structure

There are three parts to an ISIN as exemplified by US-049580485-1 (the dashes don’t count, they are there to add clarity). The code can be broken down as follows:

  • A two-letter country code, drawn from a list (ISO 6166) prepared by the International Organization for Standardization (ISO). This code (country code) is assigned according to the location of a company’s head office. A special code Euroclear ISIN, “XS” is used for international securities cleared through pan-European clearing systems like Euroclear (bonos en Espanol) and CEDEL or Clearstream. Euroclear Clearstream or DTC, the CDS’, Depository receipt ISIN usage is unique in that the country code for the security is that of the receipt issuer, not that of the underlying security, which help for ISIN search.
  • A nine-digit numeric identifier, called the National Securities Identifying Number (NSIN). If a national number is composed of less than nine digits, it is padded with leading zeros to become a NSIN. The numeric identifier has no intrinsic meaning – it is essentially a serial number.
  • A single check-digit. The digit is calculated based upon the preceding 11 characters/digits and uses a sum modulo 10 algorithm and helps ensure against counterfeit numbers.

Universal Acceptance

Universal acceptance of ISIN number is becoming more common (common codes as well). ISINS are used by share custodians to track holdings of institutional investors in a format which is consistent across markets worldwide. Hedge fund security identifiers like SEDOLISIN and CUSIP are common as well.

If you company or fund needs assistance with any aspect of the ISIN world feel free to contact us anytime.

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