Federal Reserve officials won’t be able to trade a slew of assets including stocks and bonds — as well as cryptocurrencies — under new rules that became formal Friday.
Continue following up regulations announced in OctoberFederal Open Market Committee (policymaking body) announced that many of the restrictions would be in effect as early as May 1.
These rules apply to FOMC members and regional bank presidents, as well as a host of officials such staff officers, bond manager managers, and Fed employees who attend regular board meetings. These rules also apply to spouses, minor children and their families.
The Federal Reserve anticipates that any additional staff members will be subject to these rules once further analysis and review has been completed,” the release stated.
According to the statement, the rules are designed “to support the public’s confidence in the integrity and impartiality of the Committee’s work by guarding against any appearance of conflict of interests.”
After disclosures by senior officials of the central bank last year, they took immediate action. Fed officials had been trading individual stocksStock funds and just prior to the time that the central bank took sweeping measures to boost the economy during the Covid spread.
Eric Rosengren (Boston) and Robert Kaplan (Stockholm) are the regional presidents left their positionsFollowing the controversy.
Crypto ban
Friday’s announcement extended the ban on cryptocurrencies such as bitcoin. These cryptocurrencies were not specifically mentioned. the original announcement in October.
Officials still held market positions under the new regulations will have twelve months to eliminate prohibited positions. The new Fed officials have six months to comply.
Future officials will have to give 45 days notice prior to making permissible assets purchases. The restriction, which goes into effect on July 1, is a limitation that applies only to those who are covered under the new rules. These officials will then have to maintain those positions at least for one year, and they will not be allowed trading in “periods heightened financial markets stress”. The Fed chair will decide the definition, but there is no standard.
The ban on stocks, bonds, and crypto also applies to commodities, foreign currency, sector index funds and derivatives.
The Congress is currently debating legislation that will also restrict individual stock ownership, but it hasn’t been approved.
