In March 1997, the Directive 97/9/EC in relation to the establishment of investor compensation schemes was published. The directive, known as the Investment Compensation Scheme Directive (the ICD) is as an integral part of the framework for the establishment of a single market in financial services and stemmed from another directive, Council Directive 93/22/EEC on investment services in the securities field. The Directive 93/22/EEC, replaced by Directive 2004/39/EC on markets in financial instruments (MiFID) at the 1st of November 2007, laid down certain regulatory and prudential rules governing investment firms throughout the EU. These rules aimed to protect investors’ money and securities. In this case, an investor is defined as any natural or legal person who has entrusted money or financial instruments to an investment firm in connection with investment business. However, the Directive 93/22/EEC did not offer protection to investors in cases where insolvency resulted in the inability of an investment firm to return securities or money to investors. In order to surpass this shortcoming, the purpose of the ICD was to provide a minimum level of protection for investors in such circumstances. The ICD provides a compensation limit of EUR 20,000 for each investor. In this matter, Romania negotiated with the European Union transitional arrangements, so that this compensation limit will be reached in 2012.
Under the Directive 97/9/EC, the Member States could exercise discretion as to the organisational structure and financing of the investor compensation schemes. Consequently, a variety of ownership, funding arrangements and members contributions could be observed across the EU. The establishment of the investors compensation schemes was considered a measure of building trust and investors’ participation in the financial system.
The Fund operated until September 15, 2021, as a legal entity under private law, organized as a joint-stock company, an entity regulated by the ASF. The Fund was established based on Law no. 297/2004 regarding the capital market and was authorized by the CNVM Decision as an "investor compensation fund" within the meaning of Law no. 297/2004, and as an "investor compensation scheme" within the meaning of Directive 97/9/EC concerning investor compensation schemes.
On April 21, 2021, Law no. 88/2021 regarding the Investor Compensation Fund was published in the Official Gazette. Subsequently, the Fund changed its status from a legal entity organized as a commercial company to a legal entity under public law, with its own statute approved by the Board of the Financial Supervisory Authority, hereinafter referred to as ASF, upon the proposal of the Fund's Board of Directors.
