The ISIN standard is used worldwide to identify specific securities such as bonds, stocks (common and preferred), futures, warrant, rights, trusts, commercial paper and options. ISINs are assigned to securities to facilitate unambiguous clearing and settlement procedures.
The international securities identification number (ISIN) is a 12-digit alpha-numeric code that is used to uniquely identify a security’s issue.
They act to unify different ticker symbols “which can vary by exchange and currency” for the same security.
An ISIN is never reused. An ISIN will change due to certain types of corporate actions, such as a Name Change.
In South Africa, an ISIN is issued with an Alpha Code.
There are several key components to an ISIN, as exemplified by the following ISIN example: ZA123456789 (or the three parts as ZA-12345678-9).
The ISIN code can be explained as follows:
A two-letter country code drawn from the International Organisation for Standardisation. This two letter alphabetical code is allocated to the company’s home country or in most instances where the company is domiciled in, or may have a corporate headquarter base. Examples:
§ ZA for South Africa
§ US for the United States of America
§ ME for Mexico
§ etc.
The second part of the 12 ISIN is 9 digits (always numbers) that is classified as an “identifier”. This identifier is referred to as the National Securities Identifying Number “NSIN”), and is allocated by a specific country's NNA. If less than 9 digits are used, zeros are added to the number to ensure that it is always 9 digits in length. The NSIN is generally randomly created through various mathematical algorithms.
The last 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.
Securities with which ISINs can be used include debt securities, such as notes or bonds as well as shares, such as common stock or shares of a fund, options, derivatives and futures.
The ISIN identifies a security. It should not be confused with a ticker, which identifies the stock at the Exchange level. For instance, IBM stock trades through almost 25 trading platforms and Exchanges worldwide. IBM stock has different tickers depending on where it is traded, but has only a single ISIN for each security. The ISIN acts as identifier for the securities and as such is the only common denominator securities identification number that is universally recognised.