ISO 10962:2021 Securities and related financial instruments — Classification of financial instruments (CFI) code
The CFI code is a standard used by financial institutions to classify financial instruments. It was first published in 2009 and has been revised several times since then. The most recent revision was made in 2021.
What is ISO 10962:2021?
ISO 10962:2021 is an international standard that establishes a classification system for financial instruments. The purpose of this standard is to provide a common language for the description of financial instruments.
The classification system consists of a hierarchical structure of codes that identify the type of instrument, the instrument’s characteristics, and the instrument’s issuer.
The hierarchy is as follows:
- Level 1: Instrument type
- Level 2: Characteristics of the instrument
- Level 3: Issuer of the instrument
Each level of the hierarchy is represented by a two-digit code. For example, the code for an equity instrument would be 01, and the code for a debt instrument would be 02.
Instrument type codes are further divided into subcategories. For example, equity instruments are divided into common stock (11), preferred stock (12), and other equity instruments (13). Debt instruments are divided into bonds (21), notes (22), and other debt instruments (23).
Characteristics codes identify the features of an instrument, such as whether it pays interest (31) or dividends (32). Issuer codes identify the entity that issued the instrument, such as a government (41) or a
what are the requirements of ISO 10962:2021?
In order to provide a common language for the classification of financial instruments, ISO 10962:2021 establishes a code known as the CFI code.
The CFI code is used to identify the type of security and its characteristics. It is made up of six characters, with each character representing a different aspect of the security.
The first character of the CFI code represents the asset class of the security. The second character represents the type of security within that asset class. The third and fourth characters represent the features of the security, while the fifth and sixth characters represent the issuer or underlying instrument of the security.
In order to be compliant with ISO 10962:2021, organizations must use the CFI code when reporting securities on their balance sheets and income statements. They must also provide disclosures about the nature and risk of their securities holdings.
What are the benefits of ISO 10962:2021
When it comes to financial instruments, there are a lot of different ways to classify them. This can make it difficult to keep track of everything and to know where each instrument belongs.
The ISO 10962:2021 standard is designed to help with this by providing a consistent way to classify financial instruments. It is used by banks, investment firms, and other organizations all over the world.
The benefits of using this standard include:
improved communication between organizations
- reduced risk of errors
- easier data analysis
- better decision making
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