Economic Model of Compensation Fund in Russia

Yuri Danilov

Finansovyj žhurnal — Financial Journal, 2020, issue 1, 87-104

Abstract: The macroeconomic stabilization that took place in Russia has led to a partial transfer of household savings from bank deposits to the securities market. This process determines the relevance of creating institutions to minimize the non-market risks of small investors. As global experience shows, among such institutions, the most important one is the compensation fund. The article discusses projects for the creation of a compensation fund in Russia, previously proposed by the Bank of Russia and the National Association of Stock Market Participants (NAUFOR). The results of recalculating the forecast balance of the compensation fund are presented, based on the previously formulated prerequisites of NAUFOR, but also underpinned by the latest quantitative data, which have changed significantly over the past two years as a result of explosive growth of household investments in the securities market. It is shown that in the new conditions it is impossible to ensure the adequacy of financing of compensation funds on the basis of previously proposed sources. The author presents a new approach to the formation of a compensation fund in Russia, which takes into account not only the new Russian realities, but also the existing global experience in the field of creating compensation funds. In the framework of this approach, the author proposes expanding the list of financing sources for the compensation fund. The article provides forecast estimates of the fund balance and ratios of compensation fund adequacy, calculated on the basis of these proposals, which indicate that this model of the compensation fund is economically viable and could be implemented as soon as possible. Further prospects for the development of a national compensation system, which could include compensation funds operating in various segments of the financial market, are considered.

Keywords: compensation fund; household savings; stimulation of long-term investments; protecting the interests of investors; individual investment accounts; securities; compensation system; non-market risks (search for similar items in EconPapers)
JEL-codes: G18 G20 G23 G28 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:fru:finjrn:200106:p:87-104

DOI: 10.31107/2075-1990-2020-1-87-104

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