Classification of Financial Instruments (CFI) - ISO 10962
The CFI code has been developed to address a number of problems which have concerned the financial community on the past years. Among others the following problems have affected the financial community:
- Lack of consistent and uniform approach to grouping financial instruments
- Use of similar terminology for instruments having significantly different features in the different countries
- Inability to group securities in a consistent manner leading to reports of holdings being categorized differently.
The benefits of the code are:
- Definition and description for an internationally valid system to classify financial instruments
- Provision of a set of codes to be used by all market participants in an EDP environment and permission of electronic communication between participants
- Improved understanding of the characteristics of financial instruments will lead to a better understanding by investors.
The structure of the CFI code:
The CFI reflects characteristics that are defined when a financial instrument is issued and remain unchanged during its entire lifetime.
The CFI consists of six alphabetical characters: The first character indicates the highest level of classification (categories).
Categories:
- Equities (E)
- Collective investment vehicles (C)
- Debt instruments (D)
- Entitlement (rights) (R)
- Listed options (O)
- Futures (F)
- Swaps (S)
- Non-listed and complex listed options (H)
- Spot (I)
- Forwards (J)
- Strategies (K)
- Financing (L)
- Referential instruments (T)
- Others (miscellaneous) (M)
The second character indicates specific groups within each category:
Groups e.g. for equities:
- Common/ordinary shares
- Preferred/preference shares
- Common/ordinary convertible shares
- Preferred/preference convertible shares
- Limited partnership units
- Depositary receipts on equities
- Structured instruments (participation)
- Others (miscellaneous)
The third to sixth character indicate the most important attributes to each group:
Attributes e.g. for equities:
- Voting right
- Ownership/transfer restrictions
- Payment status
- Form