ISIN (which stands for International Securities Identification Number) code is a unique 12 digit alpha-numeric code which is assigned to various securities like equity share, bonds, government securities, commercial papers, mutual funds and warrants etc. It uniquely identifies a security and its structure is defined in the ISO 6166. The ISIN code mainly consists of three parts and they are listed below.
- A two letter country code,
- A nine character alpha - numeric national security identifier,
- Single check digit.
The nine digit security identifier is the National Securities Identifying Number (NSIN) which is assigned by the governing bodies of each country known as National Numbering Agency (NNA). The procedure for calculating the ISIN check digits is similar to the modulus 10 double add double which was used in CUSIPs.
In order to calculate the check digits first convert any letters to numbers by adding their ordinal position in the alphabet to 9. In this starting with the right most digits, every digit is multiplied by two. The resulting string of digits is added up and the numbers greater than 9 are considered as the separate digits. Finally, subtract the sum from the smallest number that ends with zero and should be greater than or equal to it. So, this gives the check digit which will be the multiple of 10.
The main purpose of ISIN is to provide and to identify securities in the countries. So with the help of the ISIN, security can be maintained nation - wide. It is also known as stock symbol or ticker symbol which is used to identify publicly traded shares of particular stock market. It doesn’t contain information characterizing financial instruments but serves as the security for trade purposes. So we can safe guard our trade using this!