Design of Structured Financial Products. Evaluation of Effectiveness for the Bank and Investors

The paper is devoted to design of a structured financial product with full capital protection in real terms and opportunities for additional yield linked to the performance of MICEX index. The relevance of this topic is determined by the latest sharp increase in inflation in Russia. Additionally, inflation is an understandable risk factor for the puclic. The guarantee of the capital protection in real terms may attract funds of the population into the financial system for longer periods. Thus, the real sector will benefit as well. Finally, there will be a demand from institutional investors with inflation-linked liabilities such as pension funds. While the opportunity for additional yield will attract private banking instituitions. Which is also important, involved of large state-related banks may indicate to the public that the government is determined to keep inflation under control. In this paper the risk-management and legal issues are covered as well as role of the issuer after the sale of the structured product are covered.