Frequency distribution and Premium Listing: Difference between pages

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imported>Doug Williamson
(Reference lognormal distributions in the context of leptokurtic distributions. Note that Binomial and Poisson distributions are theoretical.)
 
imported>Doug Williamson
(Add quote. Source: ACT ESG blog 19 Feb 2021 https://www.treasurers.org/hub/blog/ESG/Update-February-2021)
 
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''Statistics.''
''London Stock Exchange.''


A description of the relative number of times that given outcomes have occurred, or are expected to occur, relative to the whole population.  
A Premium Listing on the London Stock Exchange is only available to equity shares issued by trading companies and closed and open-ended investment entities.  


Three important frequency distributions are the Normal distribution, Lognormal distribution, and Leptokurtic distribution, described below.  
Issuers with a Premium Listing are required to meet the UK’s super-equivalent rules, which are higher than the EU minimum requirements for a Standard Listing.


All three of these types of distribution are used in practice as approximations to model the distributions of financial variables.
A Premium Listing means the company is expected to meet the UK’s highest standards of regulation and corporate governance.


1. ''Normal distributions'' are usually the simplest approximations to work with, and are assumed by - for example - many Value at Risk analysis models and measures. A theoretical shortcoming of using normal distributions as a model is that they assume an infinitely large downside potential including negative prices; whereas many financial variables - such as asset prices - cannot in practice fall so far as to become negative.
As a consequence the company may enjoy a lower cost of capital, through greater transparency and through building investor confidence.


2. ''Lognormal distributions'' usually describe better the theoretical range of financial variables such as traded equity prices, which theoretically have no upside limit but which cannot fall below zero.


3. In practice, observed financial returns are usually more closely approximated by ''leptokurtic distributions'', with a greater frequency both of very high and of very low returns, than predicted by the comparable normal or lognormal distribution. So in risk analysis, if a population distribution is assumed to be normal or lognormal, but is in reality leptokurtic, downside risk will be understated.
:<span style="color:#4B0082">'''''Climate risk disclosures'''''</span>


:"The Financial Conduct Authority (FCA) implemented a new Listing Rule applicable to premium listed commercial companies designed to help users understand how they are managing climate-related risks.


Other commonly used types of theoretical frequency distribution include Binomial distributions and Poisson distributions.
:The new Rule (LR 9.8.6(8)) does this by requiring disclosures in annual reports consistent with the recommendations and recommended disclosures of the Task Force on Climate-related Disclosures (TCFD).
 
:The Rule will apply to accounting periods beginning on or after 1 January 2021 with the first annual financial reports under the new rule will be published in the spring of 2022. "
 
:''ACT blog, 19 February 2021 - Naresh Aggarwal, Associate Director, Policy & Technical.''




== See also ==
== See also ==
* [[Binomial distribution]]
* [[Cost of capital]]
* [[Cumulative frequency distributions]]
* [[Equity]]
* [[Decile]]
* [[Financial Conduct Authority]]
* [[Frequency curve]]
* [[Investor relations]]
* [[Frequency polygon]]
* [[Listing]]
* [[Grouped frequency distribution]]
* [[Listing particulars]]
* [[Histogram]]
* [[Listing Rules]]
* [[Leptokurtic frequency distribution]]
* [[London Stock Exchange]]
* [[Lognormal frequency distribution]]
* [[Main Market]]
* [[Normal frequency distribution]]
* [[Premium]]
* [[Percentile]]
* [[Standard Listing]]
* [[Poisson distribution]]
* [[Task Force on Climate-related Financial Disclosures]]
* [[Probability]]
* [[Transparency]]
* [[Value at risk]]
* [[UK Corporate Governance Code]]
 
[[Category:Accounting,_tax_and_regulation]]

Revision as of 10:57, 11 March 2021

London Stock Exchange.

A Premium Listing on the London Stock Exchange is only available to equity shares issued by trading companies and closed and open-ended investment entities.

Issuers with a Premium Listing are required to meet the UK’s super-equivalent rules, which are higher than the EU minimum requirements for a Standard Listing.

A Premium Listing means the company is expected to meet the UK’s highest standards of regulation and corporate governance.

As a consequence the company may enjoy a lower cost of capital, through greater transparency and through building investor confidence.


Climate risk disclosures
"The Financial Conduct Authority (FCA) implemented a new Listing Rule applicable to premium listed commercial companies designed to help users understand how they are managing climate-related risks.
The new Rule (LR 9.8.6(8)) does this by requiring disclosures in annual reports consistent with the recommendations and recommended disclosures of the Task Force on Climate-related Disclosures (TCFD).
The Rule will apply to accounting periods beginning on or after 1 January 2021 with the first annual financial reports under the new rule will be published in the spring of 2022. "
ACT blog, 19 February 2021 - Naresh Aggarwal, Associate Director, Policy & Technical.


See also

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