Industry Classification Benchmark

Key Takeaways

• The Industry Classification Benchmark (ICB) categorizes public companies into industry, supersector, sector, and subsector based on primary revenue sources.
• ICB is a globally recognized industry classification system, developed by FTSE and Dow Jones, and widely used by stock exchanges.
• With four tiers and 173 subsectors, ICB aids in stock research and investment analysis, offering comprehensive data for 100,000 securities.
• ICB competes with GICS, and despite similar designations, each serves distinct exchanges and investment strategies.

What Is the Industry Classification Benchmark (ICB)?

The Industry Classification Benchmark (ICB) is a globally recognized system for classifying public companies into specific industries, supersectors, sectors, and subsectors based on their primary revenue sources. Developed by financial giants Dow Jones and the Financial Times Stock Exchange (FTSE), the ICB offers investors a comprehensive view of the market landscape. Discover how major stock exchanges worldwide, including Euronext and the London Stock Exchange, utilize the ICB to streamline investment strategies and analyze market sectors.

How the Industry Classification Benchmark (ICB) Operates

Stock exchanges around the world adopt one of two competing classification systems:

The ICB was developed by Dow Jones in partnership with the Financial Times Stock Exchange (FTSE). The latter is owned by the London Stock Exchange (LSE).

The Global Industry Classification Standard (GICS) was developed in a partnership between Standard & Poors and Morgan Stanley Capital International.

It’s worth noting that most of the same sector and industry designations exist in both the GICS and the ICB.

Each company is allocated to the subsector that most closely represents the nature of its business, based first and foremost on its primary source of revenue.

The objective of the ICB is to categorize individual companies into subsectors, based on 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 approximately 100,000 securities classified, it provides a comprehensive source of data along with a categorizing system for investors.

The system categorizes companies and securities across a hierarchy of four tiers. The tiers are divided into 11 industries, 20 super-sectors, 45 sectors, and 173 subsectors.1

The first- and second-level industry and super-sector tiers are designed to support investment strategies that depend on 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 represent more than 65% of the world's market capitalization.2 The ICB offers investors two levels of information based on time. A weekly database generates product files reflecting all changes made that week on the last business day of the week. A daily database is produced at the end of each business day.

ICB's Competitor

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

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

Most of the same sector and industry designations exist in both the GICS and the ICB.

FTSE Russell. "Industry Classification Benchmark (ICB)."

FTSE Russell. "Industry Classification Benchmark (ICB)."

Stock Market MBA. "Stock Exchanges Around The World."

Stock Market MBA. "Stock Exchanges Around The World."

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