The Industry Classification Benchmark (ICB meaning) is an system to assign all public corporations to the appropriate subsectors of particular industries. The system was designed in collaboration with Dow Jones and the Financial Times Stock Exchange (FTSE) and is widely recognized.
The hierarchy of the benchmark identifies sectors, supersectors, industries subsectors, and supersectors. For instance, Gap Inc. is classified under the Clothing & Accessories subsector within the Personal Goods sector, which is part of the Personal & Household Goods supersector within the Consumer Goods industry.
Understanding the ICB
Stock exchanges around the globe adopt one of two different classification systems:
- The ICB meaning was designed in partnership with Dow Jones in partnership with the Financial Times Stock Exchange (FTSE). The latter is part of the London Stock Exchange (LSE).
- GICS is the Global Industry Classification Standard (GICS) was developed as the context of a partnership with Standard & Poors and Morgan Stanley Capital International.
It’s important to note that many of the same sectors and industry designations are found in both GICS as well as the ICB.
Every business is assigned to the sector that best represents the character of its operations that is based primarily on the primary source of revenue.
The purpose that is the ICB is to separate specific companies into subsectors according to the primary sources of income.
How the ICB How the ICB Works
The ICB is run through FTSE Russell, a division of the London Stock Exchange. With more than 100,000 securities being classified, it is an extensive database of data as well as a categorizing system to investors.
The system classifies securities and companies in a hierarchy comprising four levels. The tiers are classified into 11 industries and super-sectors. There are also 20 super-sectors. sectors as well as 173 subsectors. 1
The first and second-level super-sectors and industries levels are designed to help strategies for investing that are based on this type of classification. The ICB goes deeper into the fourth and third levels of sector and subsector tiers.
Who uses ICB?
The ICB is utilized by stock exchanges which include Euronext, NASDAQ OMX, London Stock Exchange, Taiwan Stock Exchange, Johannesburg Stock Exchange, Borsa Italiana, Singapore Stock Exchange, Athens Stock Exchange, SIX Swiss Exchange, Cyprus Stock Exchange as well as Boursa Kuwait.
Together they exchanges together account for over 65% of global market capitalization. 2 The ICB provides investors two different levels of information according to the time. The weekly database creates products that reflect the modifications made in the week prior to the last day of business in the course of the week. A daily database is created at the conclusion of each business day.
The ICB’s competitor
The ICB is one standard that is used to define the market. The ICB is in competition with GICS, the Global Industry Classification Standard (GICS) for equity markets that was created in the context of a partnership with Standard & Poors and Morgan Stanley Capital International.
There are three major exchanges: the Toronto Stock Exchange, the Australian Stock Exchange, and the NOREX Alliance are among those which make use of GICS. GICS standard.
The majority of the same sector and industry designations are found in both GICS as well as the ICB meaning.