Global Market Commentary 18 December 2009 Portfolio Strategy Portfolio Strategy Ana Avramovic + 1 212 325 2438 What’s in a Symbol (or a RIC, or a CUSIP…)? What’s all the Fuss About? Given the many different ways of identifying a security (tickers, RICs, Bloomberg codes, SEDOLs, just to name a few), one might thing the sole purpose were to confuse the hapless trader and keep diligent back office support busy. While it’s true that many of these identifiers may seem redun
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    Global Market Commentary18 December 2009 Portfolio Strategy Portfolio Strategy  Ana Avramovic + 1 212 325 2438 What’s in a Symbol (or a RIC, or a CUSIP…)? What’s all the Fuss About? Given the many different ways of identifying a security (tickers, RICs, Bloomberg codes, SEDOLs, just to name a few), one might thing the sole purpose were to confuse the hapless trader and keep diligent back office support busy. While it’s true that many of these identifiers may seem redundant, they do, in fact serve different purposes. Sure, it  seems  like life would be easier for everyone involved if we just adopted one single identifier that would uniquely identify every security on every exchange, worldwide (the identifier that  you  already use, of course) – but that would create yet one more system to learn. In fact, as we discuss below, things are never so simple in trading and a single, fully unique identifier might actually create  new   problems.  A Method to the Madness To be fair, the multiple individuals involved in the trading process have slightly different concerns that make each prefer a slightly different scheme: ã    A broker  needs the ultimate granularity. He must be able to distinguish between every single security on every single exchange and alternative trading venue in order to determine which venue will deliver the best execution. ã   The trader  cares about identifying his particular security in the relevant market where he plans to trade, but he can leave it to his broker to drill into the specific venues within than market. He prefers something that has an intuitive relationship to the company name so it is easier to remember. Also, he only cares about the security he is trading in his market, not any related or “parent” securities in other regions. Key points    Ever wonder what is the difference between a CUSIP, a SEDOL and an ISIN?     And why in the world doesn’t everyone use a Bloomberg Code like you?    This report will tell you!    We delve into the exciting world of common (and not-so-common) identifiers, such as the ISIN, CUSIP, CINS number, SEDOL, symbol, Bloomberg code and RIC code. We describe (with examples):    What they are    When they are used    Shortcomings of each    The syntax    We also highlight special quirks that may create particular confusion.    Finally, we present a useful page on our EDGE website that displays a cross-listing of these various identifiers for stocks in your portfolio. ã   The middle & back office  tends to use machine codes to automate much of the work, so they prefer the precision that a string of digits affords. Furthermore, they are not concerned with whether the shares of Microsoft were bought on NYSE Arca or Nasdaq or BATS. They only need to identify that Microsoft stock was involved. ã   Finally, the custodian  requires even less definition. They only need to identify the company. It doesn’t even matter if (for example) Credit Suisse stock is listed in Zurich and also listed in the US OTC market. It is all Credit Suisse stock  .  As a result, in recognition of these different needs, each identifier is valuable to specific groups.  Portfolio Strategy Layers of Labeling  As discussed, identifiers have varying scope, according to the target users: international, national, trading-venue specific, and even proprietary systems. National Exhibit 1: Levels of “Uniqueness” of Identifiers   Every country has their own unique National Naming Agency that assigns codes to securities with a primary listing in their region. It is important to observe that these are assigned based on the  primary listing  of a security. Proprietary Systems  Unique for all securities. Bloomberg RIC Code Primary Issue Same for ALL related listings. Based on Primary Listing only. ISIN, CUSIP, CINS, VALOREN, other national identifiers Regional Place of Listing Unique for each listing place, but same for all trading venues within listing region. SEDOL Trading Venue For example: the main listing for Credit Suisse stock is in Zurich, but that same stock is also listed in the US in the OTC market, as well as in Germany on the Frankfurt and Xetra exchanges. ã    All of these listings will be assigned the  same  national identifier, and it will be issued by the Swiss  naming agency. ã   Even though there are listings in the US and in Germany, the US and German agencies will not issue national identifiers because those are not the  primary   listings. Unique to every trading venue. Ticker Examples of national identifiers are the following: CUSIP  – North America SEDOL  – United Kingdom Source: Credit Suisse: Portfolio Strategy     VALOREN  – Switzerland WKN / WPK   - Germany The national identifier is used to form an international identifier – the ISIN (see below). National – with International Ambitions   Note that SEDOLs and CUSIPs are slightly different from other national codes. As discussed in “The Next Step: A Single Identifier” below, the UK and North American naming agencies are expanding their scope internationally in an effort to create a single identifier that works everywhere.  As a result, some securities will have SEDOLs and CUSIPs (or CINS, the international version of a CUSIP) even when the primary listing is not in the UK/North America. International The International Security Identification Number (ISIN) was designed for the middle/back office and the clearinghouse to facilitate cross-border transactions. As such, like the national identifier, it does not distinguish on  which exchange a trade takes place. The ISIN is formed by combining the appropriate national identifier (based on the  primary listing ), with the corresponding country code for that primary listing. A final “check digit” is added to the end to ensure integrity in data transmission. The ISIN syntax requires a 9-digit national identifier. However, some are less than 9 digits long (for example, a SEDOL is 7 digits; a WKN/WPK code is 6 digits). In that case, leading zeros are added to get to 9 digits (  see “Odds & Ends” below for more ). 2  Portfolio Strategy Exchange-Specific To ‘/B’ or (not) to ‘/b’  A Note on Share Classes    Adding a Suffix When companies have multiple classes of common stock, the classes are distinguished by a suffix appended to the root symbol. Be aware that this applies when the classes are all regular common stock with the same voting rights. 2 examples:    Comcast Corp has 2 share classes but one is a “special” class of ‘A’ shares that are non-voting. As a result, there is no special suffix. The shares simply have different root symbols (CMCSA and CMCSK).    Crawford & Co also has regular Class B common shares, but the Class A shares are non-voting. Since the A Class is  not   regular common stock, they have different root symbols (CRDA and CRDB), and no suffix is necessary. Unique Syntax When there  are  multiple common stock share classes and an appendix is necessary, each exchange uses a different syntax. For example, NYSE and BATS use a period (.), while Nasdaq uses a slash (/).    Example: Berkshire Hathaway has BRK.A and BRK.B on NYSE, but BRK/A and BRK/B on Nasdaq and BATS. The Proprietary systems, Reuters and Bloomberg, also treat share classes differently. Bloomberg tends to use a slash (ex: BRK/B US for Berkshire Hathaway Class B shares), while the Reuters RIC codes often employ a dash (ex. BRK-B). Every exchange has their own symbols to identify all securities traded on their exchange. Since these symbols (aka tickers) are only unique on that particular exchange, different exchanges may use the same ticker for different companies. As an example, in the US, the ticker CSX represents CSX Corp, but in Germany, CSX is the ticker for Credit Suisse stock. In the US, it is now common to trade a stock listed on one exchange on another venue (for example, trading a NYSE-listed stock on Nasdaq). In this case, the second exchange will often use the symbol from the srcinal listing. Proprietary Finally, Bloomberg and Reuters (RIC codes) have created their own proprietary codes that only apply within their own system. These codes are always unique among all securities on all exchanges within their system, but they do not allow the middle/back office and the custodian to recognize when different securities all correspond to the same primary listing. Careful: BB & RICs are not Symbols! Bloomberg and Reuters often try to match their codes with a stock’s exchange symbol, but that is not always possible, as different exchanges may use the same ticker for different stocks (  see the section on exchange symbols above for an example with CSX  ). Moving Towards a Single Identifier Incredibly, despite the fact that there are so many identifiers, there still does not exist a single one that fully satisfies the requirements of everyone involved in the life of a trade. As the table on page 5 shows, each one has a slightly different scope, or “level of uniqueness”, with corresponding benefits as well as limitations. SEDOLs are close To resolve this dilemma, several agencies have pushed to create a single standard. SEDOL is perhaps the leader on this front. While SEDOLs were srcinally assigned only to stocks traded on the London Stock Exchange, the LSE has extended its scope over the past 5 years to provide SEDOL codes to all instruments listed globally. Coupled with a code for identifying the specific exchange – such as the existing MIC (Market Identification Code) – this would be fully unique among all securities on all exchanges. But CUSIPs are trying to fill that role as well The Symbol is Sacred It used to be the case that one could recognize a NYSE listing by its 1, 2, or 3 character symbol. Nasdaq issues had 4. Times have changed! Now, in an effort to promote competition and facilitate moving a listing, companies are allowed to retain their coveted symbol when switching markets. In addition, new listings on either exchange can apply for symbols of 1 to 5 characters. Not to be outdone by the naming agency across the pond, Standard & Poor’s, the North American national naming agency, extended their local identifier of North American companies (the CUSIP) to foreign issuers. However, these CINS (CUSIP International   Numbering System) numbers still do not exist for all securities globally. In addition, like a SEDOL, one would still need to use a CUSIP/CINS code along with a MIC to distinguish a stock on a particular trading venue. 3  Portfolio Strategy Odds & Ends The CUSIP Cousin: CINS While the North American numbering agency, responsible for assigning CUSIPs, has begun to issue numbers to foreign issuers as well, they are technically different identifiers. The CUSIP is still only assigned to North American issuers. The ID given to foreign issuers is known as a CINS number. However, many people ignore this distinction and refer to both as CUSIPs. You can recognize if a symbol is actually a CINS number if the first character is a letter, not a number. SEDOL Syntax: Leave the Leading Zeros?  A proper SEDOL is 7 digits long. 6 digits are used to identify the issuer and the seventh digit is a “check digit” to ensure accuracy in transmitting data. However, sometimes one encounters a 9-digit SEDOL. Is this a more complicated issue requiring more digits to ensure uniqueness? Is it a just mistake? Is it even a SEDOL? The answers are no, no, and not really. The SEDOL code is always 7 digits, as stated above. However, the SEDOL is also used to form the international ISIN number when the issuer is based in the UK. When plugging the 7-digit SEDOL into the 12-digit ISIN, 2 leading zeros are attached to the SEDOL. Some systems also attach the leading zeros to facilitate their own processing efforts. Padding with zeros ensures that all national identifiers (such as CUSIPs, VALORENs, WKN/WPK numbers, etc) are a consistent 9 digits. NEW Multi-ID tools online @ EDGE website Our website, Edge ( lets you upload & analyze portfolios, including pre-trade & impact cost calculations. New enhancements to the Portfolios section let you customize what IDs reports use, and also compare all IDs for a portfolio. Click here for a report with more detailed instructions. Edge also has tools to help you analyze pairs, track events, find ETFs & search all Portfolio & Derivatives Strategy reports. 1. Customize Your View  At the bottom of each page in the PORTFOLIOS section is a hot-link to select whatever ID you prefer to see in your reports. Choose between RICs, Bloomberg codes and SEDOLs 2. Map IDs for Your Portfolio To view a matrix of all IDs for a portfolio, go to Portfolios > Positions   >   ID Map tab  along the left to access the page. You can run this report for any portfolio already loaded in your MyLists page.   1 213 2 4
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