Industry Classification Benchmark (ICB)

What Is the Industry Classification Benchmark (ICB)?

The Industry Classification Benchmark (ICB) is a system for doling out all public companies to suitable subsectors of specific industries. The system was developed by Dow Jones and the Financial Times Stock Exchange (FTSE) and is recognized globally.

The benchmark's hierarchy distinguishes industries, supersectors, sectors, and subsectors. For instance, Gap Inc. is assigned to the Clothing and Accessories subsector inside the Personal Goods sector, which is under the Personal and Household Goods supersector inside the Consumer Goods industry.

Grasping the ICB

Stock exchanges around the world take on one of two contending classification systems:

• The ICB was developed by Dow Jones in partnership with the Financial Times Stock Exchange (FTSE). The last option is owned by the London Stock Exchange (LSE).
• The Global Industry Classification Standard (GICS) was developed in a partnership between Standard and Poors and Morgan Stanley Capital International.

It's worth noticing that the vast majority of similar sector and industry assignments exist in both the GICS and the ICB.

Each company is allocated to the subsector that most closely addresses the idea of its business, put together as a matter of some importance with respect to its primary source of revenue.

The objective of the ICB is to order individual companies into subsectors, in light of each company's major source of revenue.

How the ICB Works

The ICB is managed by FTSE Russell, a division of the London Stock Exchange. With roughly 100,000 securities classified, it gives a thorough source of data alongside a sorting system for investors.

The system orders companies and securities across a hierarchy of four tiers. The tiers are separated into 10 industries, 18 super-sectors, 39 sectors, and 104 subsectors.

The first-and second-level industry and super-sector tiers are intended to support investment strategies that rely upon such classification. The ICB drills down further at the third-and fourth-level sector, and subsector tiers.

Who Uses ICB

The ICB is adopted by stock exchanges including 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, and Boursa Kuwait.

Together, these exchanges address over 65% of the world's market capitalization. The ICB offers investors two levels of data in view of time. A week by week database creates product records mirroring all changes made that week on the last business day of the week. A daily database is delivered toward the finish of every business day.

ICB's Competitor

The ICB is a single standard that characterizes the market. The ICB contends with the Global Industry Classification Standard (GICS) for equities, which was developed in a partnership between Standard and Poors and Morgan Stanley Capital International.

The Toronto Stock Exchange, the Australian Stock Exchange, and the NOREX Alliance are among those that utilization the GICS standard.

A large portion of similar sector and industry assignments exist in both the GICS and the ICB.

Features

• The system assists investors with researching stocks and distinguish contenders.
• The ICB orders each public company by its industry, supersector, sector, and subsector.
• One of two classification systems are adopted by stock exchanges worldwide.