CPM Group: CUSIP Identifiers ‘Significant Step’ For Precious-Metal SectorBy Kitco News
Wednesday September 28, 2016 10:23
(Kitco News) - CPM Group says the first-ever CUSIP identifiers for precious metals are a “significant step” for the market.
The consultancy, late Tuesday, released a memo to clients on the impact of news earlier this month that CUSIP Global Services (CGS) is collaborating with Delaware Depository, which provides precious-metals custody services, to create the first-ever CUSIP identifiers for physical precious metals.
CUSIP numbers are assigned to financial assets traded in the U.S. They will be assigned by CGS to the Delaware Depository's fungible products, will be used to help standardize the process of trading and tracking precious metals within investor portfolios.
“The absence of CUSIP numbers for physical-precious metals investment products was one of the mechanical aspects of financial markets that kept physical precious metals apart from mainstream investment channels and markets,” CPM Group said. “Assigning CUSIP numbers to an initial 93 gold, silver, platinum, and palladium investment products allows these assets to be more readily traded, bought, sold, and kept in standardized portfolios.
“In itself it is not perhaps a big deal, but it is a big step forward in getting gold and precious metals into the system under which financial assets are bought, sold, and managed by individual and institutional investors, and by brokers and other sell-side financial institutions.”
The nine-digit CUSIP identification numbers, already used in equity and fixed-income markets, will complement the proprietary, internal product codes Delaware Depository has been using to track and manage clients' assets.
"The introduction of the CUSIP ID into the precious-metals market represents an enormous step forward in the pursuit of a more modern, efficient, and transparent marketplace," said Jon Potts, managing director of Delaware Depository. "We see this critical first step as an exciting opportunity to take a leadership role in the precious-metals industry and look forward to further collaboration with CGS to bring their rich experience in identifier standards to bear for the precious metals market."
While the collaboration initially covers fungible precious metals, CGS said it plans to expand its offerings to cover non-fungible products as well, including individual gold bars with unique serial numbers from accredited refiners.
"Though it is arguably one of the world's oldest asset classes, gold is one of the last to receive CUSIP identification. As markets and trading and portfolio management mechanisms become increasingly electronic, the need for a universal standard is growing quickly," said Matthew Bastian, director of market, business and product development with CUSIP Global Services.