Risk reserve is similar to investor protection fund, which is to solve the losses caused to investors by some unexpected situations. The better the credit, the less risk reserve will be drawn. Companies with poor credit, or small companies, have high accounting, so as to encourage brokers to do big and complete.

Investor protection fund, or investor compensation fund or investor compensation fund, refers to a guarantee mechanism that when a listed company or securities company has a payment crisis and faces bankruptcy or bankruptcy liquidation, the fund directly compensates part or all of the losses to the relevant investors of the crisis or bankrupt institution.

Extended data

institutional foundation

Investor protection fund is an important part of the asset risk response mechanism of securities customers. In addition to strictly supervising the separation of net capital and customer assets of securities companies and establishing bankruptcy liquidation procedures of securities companies focusing on investor protection, investor protection funds build the last barrier for the safety of customer assets in a way equivalent to customer asset insurance.

The institutional basis for establishing investor protection funds in different countries is different, which can be roughly divided into legal norms and self-discipline rules.

References:

Baidu Encyclopedia-Investor Protection Fund