Frequency distribution and Premium Listing: Difference between pages

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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.


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


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.


:<span style="color:#4B0082">'''''Climate risk disclosures'''''</span>


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.
:"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).


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.
: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.''


Other commonly used types of theoretical frequency distribution include Binomial distributions and Poisson distributions.


== See also ==
* [[Cost of capital]]
* [[Equity]]
* [[Financial Conduct Authority]]
* [[Investor relations]]
* [[Listing]]
* [[Listing particulars]]
* [[Listing Rules]]
* [[London Stock Exchange]]
* [[Main Market]]
* [[Premium]]
* [[Standard Listing]]
* [[Task Force on Climate-related Financial Disclosures]]
* [[Transparency]]
* [[UK Corporate Governance Code]]


== See also ==
[[Category:Accounting,_tax_and_regulation]]
* [[Binomial distribution]]
* [[Cumulative frequency distributions]]
* [[Decile]]
* [[Frequency curve]]
* [[Frequency polygon]]
* [[Grouped frequency distribution]]
* [[Histogram]]
* [[Leptokurtic frequency distribution]]
* [[Lognormal frequency distribution]]
* [[Normal frequency distribution]]
* [[Percentile]]
* [[Poisson distribution]]
* [[Probability]]
* [[Value at risk]]

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