Industry Classification Benchmark (ICB)
Contents
Unlocking the Industry Classification Benchmark (ICB): A Comprehensive Guide
Deciphering the Industry Classification Benchmark (ICB)
The Industry Classification Benchmark (ICB) is a powerful tool used to categorize public companies into specific industries, supersectors, sectors, and subsectors. Developed collaboratively by Dow Jones and the Financial Times Stock Exchange (FTSE), the ICB plays a pivotal role in organizing the global market.
Exploring the ICB Framework
Understanding the ICB involves delving into its hierarchical structure, which segments companies based on their primary revenue sources. From industries to subsectors, each classification aids investors in conducting thorough research and identifying potential competitors.
The Inner Workings of the ICB
Managed by FTSE Russell, a division of the London Stock Exchange, the ICB boasts a vast database comprising approximately 100,000 classified securities. Its meticulous categorization system, spanning four tiers and encompassing 10 industries, 18 super-sectors, 39 sectors, and 104 subsectors, provides investors with invaluable insights for strategic decision-making.
Who Embraces the ICB
The ICB has garnered widespread adoption among prominent stock exchanges worldwide, including Euronext, NASDAQ OMX, London Stock Exchange, and many others. With over 65% of the world's market capitalization represented by these exchanges, the ICB serves as a cornerstone for investors seeking accurate and timely market data.
Navigating Competition: ICB vs. GICS
While the ICB remains a dominant force in market classification, it faces competition from the Global Industry Classification Standard (GICS), developed by Standard & Poor's and Morgan Stanley Capital International. Despite this rivalry, both systems offer similar sector and industry designations, catering to the diverse needs of investors across the globe.