SEDOL

Published on :

21 Aug, 2024

Blog Author :

Edited by :

Reviewed by :

SEDOL stands for Stock Exchange Daily Official List, a seven-character unique code assigned to all securities listed on all small and big stock exchanges in the United Kingdom. These codes help traders, investors, and market analysts to identify securities. The securities can be common domestic or foreign company stocks, investment trusts, unit funds, bonds, or insurance-based securities.

It denotes the listed companies and other financial assets of the London Stock Exchange (LSE) and other exchanges in the UK. The utility of the SEDOL code lies in the swift and easy identification feature that it offers for the securities, thereby eliminating trading errors in the global marketplace. Each character in the code is equal to its position in the alphabet plus nine.

SEDOL Meaning

SEDOL is a seven-character alphanumeric code uniquely assigned to different forms of assets, common securities, and trust funds.
Earlier in 2005, the SEDOL was dynamic, but after the changes made in January 2006, the new SEDOL codes were assorted sequentially.
The code is of seven characters split into two parts; the first six digits are alphanumeric codes, and the seventh digit represents the trailing check digit.
A company can have multiple SEDOLs that are comparable to its ISIN identification number.

SEDOL (Stock Exchange Daily Official List) Explained

SEDOL are alphanumeric identification characters assigned to each security and asset class listed on the London Stock Exchange, including the submarket and other small security markets in the United Kingdom and Ireland. It enables traders to verify and trade in securities with ease of settlement and cost reduction in trade. Creating a SEDOL number is based on two parts of a seven-digit code; the first six characters are alphanumeric, and the seventh character is treated as a check digit. As per SEDOL format, letters between B and Z are allowed except for vowels, and numbers from 0 to 9 are taken as numerals.

Before 2004, these codes were strictly numeric, but now, the sequential use of letters is also implied. For each character, numbers go before letters. SEDOL codes issued after 2004 start with letters. The last check digit represents the weighted sum of the first six characters. Many authorities define SEDOL as a trading standard established for better stock selection, especially in the UK stock market. In a global marketplace, it is often closely compared with the Committee on Uniform Securities Identification Procedures (CUSIP) but has its own significance and application.

A company seeking a SEDOL number submits a formal request application to the LSE. The authorities verify if they possess a valid SEDOL license with the exchange, acknowledge that the shared information is correct concerning all the documents, and thereby agree to terms and conditions. Many companies provide traders with information regarding securities, trusts, and other financial products and use global data for trade and data execution since every listed or unlisted security in a certain country is allocated these codes.

Examples

Let us consider the following instances to understand how these codes are assigned with respect to a standard pattern:

Example #1

Suppose Company X is listed on the London Stock Exchange, and its SEDOL number is 0485025. As per the issuance method, the code can be checked when the digits are multiplied by their assigned weight and accumulated. The resulting number should be a multiple of ten. If so, the code is correct.

In the case of company X, the calculation follows like -

0+4x1+1x8+5x3+0+2x9+5x3 = 60

Since 60 is a multiple of 10, the SEDOL is correct.

Example #2

Avesoro, a Canadian mining company known for its explorations and gold deposit developments in Cameroon and Liberia, changed its ISIN and SEDOL codes in 2016. The company announced that there would be a change in the name, and it would become Avesoro Resources Inc. Its shares in the Toronto Stock Exchange (TSX) and AIM, a sub-market of LSE, will begin trading with new codes on December 12, 2016.

The company also declared that there would be two different SEDOLs for trading: BYSL961 for AIM and BYSL994 for TSX. It additionally specified that no actions are required from the investor's end regarding the change.

ISIN vs CUSIP vs SEDOL

When it comes to assigning codes to different securities listed in different exchanges, three identifier systems are most popular – ISIN, CUSIP, and SEDOL. Let us check out the differences between the three below:

ISIN stands for International Securities Identification Numbering System. CUSIP refers to the Committee on Uniform Securities Identification Procedures, while SEDOL stands for Stock Exchange Daily Official List.
ISIN is used for trade and settlement in the global marketplace internationally. CUSIP is a code system used in the US market for all registered US and Canadian companies, bonds, and commercial papers. In contrast, SEDOL is primarily used for securities listed on the London Stock Exchange or traded in the British financial markets.
ISIN has twelve characters, and CUSIP has nine characters in its code. On the other hand, SEDOL is a seven-character code.
The CUSIP is authorized by the American Bankers Association and managed by Standard & Poors. On the contrary, the ISIN is operated by the International Organisation for Standardization, but the London Stock Exchange formulates the SEDOL.

Frequently Asked Questions (FAQs)

How is a SEDOL generated?

A SEDOL is generated by requesting the London Stock Exchange; they are in control and hold the authority of its issuance as it is the UK's primary and most significant stock market. With changes like corporate mergers, takeovers, new ISIN issuance, and changes in company headquarters, the LSE can issue new SEDOL codes.

Can a SEDOL have multiple ISINs?

Yes, a company with multiple shares, bonds, and notes is likely to have more than ISIN. A company issues securities either as a debt or equity. Therefore, one share class means one ISIN and multiple classes refer to multiple ISINs. If required, the ISIN number can be checked on its database.

What is the importance of SEDOL?

The importance of SEDOL is -

- Improving trade efficiency and error-free transactions.
- Used as a unique market-level security identifier in the global market.
- Helps in trade settlements and cross-border transactions.