Russian capital market: development tendencies, financial literacy and private investors protection

Abstract

The current state of the Russian Capital Market private investments as well as its development impediments are presented in this research. Author states that one of the most fundamental aspects for the lag in development and unpopularity of the financial market instruments among the general public is the lack of protection of investments at the stock market through the compensation fund institution.Investment insurance scheme functions for a long period of time both at emerging and developed markets: in 1970 the Securities Investment Protection Corporation was settled in the USA and in2001 the Financial Services Compensation Scheme was introduced in the UK. While scrutinizing Russian law enforcement system one can notice the lag of modern mechanisms of security of property rights from the current changes at the financial market. Nowadays we can witness the growing tendency for globalization which accounts for the rise in the level of competition which includes capital markets. That is why it is of primary importance to create and to implement the legislation for compensation funds at stock markets shortly in order to maintain the leading role between the participants of the Eurasian Economic Union (where Russian Federation is deeply involved as a fully legitimate member) and to become one of top-10 financial centers in Europe and Asia. Also, changes to a pending government law «Private investment accounts insurance» are proposed to apply. Furthermore, various measures that could help to develop public awareness of investments and improve financial literacy are being considered as important steps to evolve.