What it means
Every security needs a unique label, otherwise two companies with similar names could be confused. In Switzerland, the number is assigned by SIX Financial Information, the data arm of the Swiss exchange group.
The word valoren is the Swiss term for securities. Banks and brokers in Switzerland use the number on statements, trade tickets and settlement instructions.
Because it is short and unambiguous, it avoids errors that could arise from typing a long company name. It also helps wealth managers who hold the same security on behalf of many clients.
The number has a close link to the international system. The International Securities Identification Number, or ISIN, for a Swiss security is made up of the letters CH, the valoren number padded with leading zeros to nine digits, and a final check digit.
So a valoren can be converted into an ISIN, and the reverse is also possible. Valoren numbers do not change when a security is renamed, which makes them stable for record keeping.
They are not a measure of quality or size and the numbers carry no meaning in themselves. Two securities with consecutive numbers are not related in any way.
For non-Swiss investors and finance teams, the number matters when instructing a Swiss custodian or reconciling holdings. A portfolio statement from a Swiss private bank will often show the valor alongside the ISIN.
Mistyping a digit can point to a different security, so it is wise to check with a second identifier such as the ISIN or the ticker. Other markets have similar systems.
The United States uses CUSIP numbers, the United Kingdom uses SEDOL codes and Germany uses WKN numbers. The valoren is the Swiss equivalent, and in practice all of these are tied together through the global ISIN.
In practice
Real-world examples.
Example
A private bank in Zurich sends a client a statement listing each holding with its valoren number and ISIN. The client's accountant in London uses the ISIN to match the holdings to her records. She also keeps the number on file, because the ISIN may change if the security is restructured while the valoren stays the same.
Example
A fund administrator receives a trade instruction that gives only a company name. Its operations team looks up the valoren number to make sure the right Swiss share is bought. The team also stores both identifiers in its trading system, so a typing error in one can be caught by the other.
Example
A corporate treasurer instructs a Swiss custodian to move a bond. He quotes the valoren number and the ISIN, so that the custodian can confirm the instruction quickly. The custodian replies with the settlement date and the cost of the transfer, so the treasurer can plan his cash for the day.
Formula
Calculation
ISIN for a Swiss security = CH + valoren number padded to 9 digits + 1 check digit
Suppose a fictional security has the valoren number 1234567. Padded to nine digits with leading zeros it becomes 001234567, so the start of the ISIN is CH001234567. The check digit is found by converting the letters to numbers (C is 12 and H is 17), giving 1217001234567, then applying the standard check digit method used for ISINs, which gives 1. The full ISIN is CH0012345671. The number is invented for illustration and does not belong to a real security.Case study
Seen in the real world.
Alpenglow Asset Management is an illustrative, fictional firm that manages $300,000,000 for international clients. It holds many Swiss shares and bonds, and its back office reconciles the holdings with the custodian each morning.
An analyst notices that two securities with similar names have different valoren numbers, and that a recent trade had been booked against the wrong one. The error affected a position worth $250,000.
In this illustrative story the firm corrects the booking, and adds a rule that every trade must be matched on the valoren number and the ISIN. The finance director records that identifiers matter more than names when systems exchange data. The back office also trains new staff on the layout of Swiss security codes, so errors are spotted early rather than at month end.
Watch out
Common mistakes.
- Using the company name alone to identify a security, when several securities from the same issuer may exist.
- Confusing the valoren number with the ISIN, when the ISIN is the longer international code built partly from the valoren.
- Assuming the number tells you something about the security, when it is only an identifier.
Questions
People also ask.
Who issues valoren numbers?
SIX Financial Information assigns them to securities in Switzerland and Liechtenstein.
How long is a valoren number?
It can have up to nine digits, and it is padded with zeros when used inside an ISIN.
Do I need it if I use ISINs?
Not always, but Swiss banks and custodians still show it on documents, so it helps to recognise it.
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