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The Industry Classification Benchmark (ICB), the joint classification system launched by Dow Jones Indexes and FTSE Group, today announced that they will be enhancing their four-tier industry classification system. ICB is a detailed and comprehensive structure for sector and industry analysis, facilitating the comparison of companies across four levels of classification and national boundaries.
Additions will be made to the supersector, sector and subsector levels, beginning with the elevation of real estate to the supersector level. Seven new subsectors will be added under real estate to include more detailed classification of REITs. Additionally, ICB will recognize alternative power sources by adding an alternative energy sector under the oil & gas supersector. These changes will be effective to the ICB system on March 1, 2008.
With the integration of the above enhancements, the structure will now be based on 10 industries, 19 supersectors, 41 sectors and 114 subsectors and offers broad, global coverage of over 50,000 companies and 55,000 securities. Prior to the revisions, the ICB Structure included 10 industries, 18 supersectors, 39 sectors and 104 subsectors.
ICB’s changes to the classification of real estate companies will reflect the increasingly-recognized differences between real estate firms and financial services firms, and will provide more precise categorizations of real estate companies, particularly real estate investment trusts (REITs). The real estate sector will be elevated to a supersector with a new hierarchy of real estate sectors and subsectors including real estate holding & development companies, real estate services, and REITs involved in: industrial & office, retail, residential, diversified properties, specialty properties, mortgage companies, and hotels & lodging.
Expansions to oil and gas are being made to reflect the changing energy market, specifically the proliferation of companies involved in alternative energy and alternative utilities. The oil and gas industry group and supersector will be expanded to include an alternative energy sector with renewable energy equipment and alternative fuel subsectors. The electricity sector will now be separated into conventional electricity and alternative electricity subsectors and will continue to be classified under the utilities supersector.
ICB is now in use by major stock exchanges, data distributors, index providers, buy side and sell side institutions, custodians and media organizations globally. Global financial institutions have integrated ICB into their investment workflow and financial services, including NASDAQ, NYSE/Euronext, the London Stock Exchange, the Swiss Exchange, Aegon, the International Monetary Fund and the World Economic Forum, as well as media outlets including The Wall Street Journal, the Financial Times, CNBC and Dow Jones Newswires.
James Cemprola, Managing Director, ICB commented, “The rapid adoption of ICB is a testament to the product’s comprehensive global coverage, which is increasingly becoming the industry standard. Its balanced structure makes ICB attractive to financial institutions on the buy side, sell side, independent research, custodial banks and global distributors.”
More information about ICB is available at www.icbenchmark.com
