Federal Reserve officials banned from trading securities

Federal Reserve officials will be prohibited from trading bonds, stocks and cryptocurrencies from May 1 2022.

According to a recent statement, the newly updated ethics rules “aim to support public confidence in the impartiality and integrity of the Committee’s work by guarding against even the appearance of any conflict of interest”.

Reports came to light last year indicating suspicious activity among Federal Reserve employees trading stocks, bonds and real estate securities in October 2020.

This was followed by the central bank instigating covid-19 policies that heavily impacted the market.

After the resignation of several high-ranking policymakers, Federal Chair Jerome Powell pushed for the monetary body to enforce new rules surrounding senior bank officials banned from engagement with any assets.

The latest amendment was issued last Friday by the Federal Reserve illustrating a new set of rules preventing Senior officials from obtaining funds, tracking business sectors or individual stocks. Investments will be banned on cryptocurrencies, commodities, individual bonds or foreign currencies.

Senior Fed officials must give an announcement 45 days in advance if they are buying or selling security alongside investments being held for at least a year under the new guidelines.

The Fed’s 12 regional bank presidents must publicly announce any securities transactions within 30 days posting financial disclosures regularly on its bank websites.

The new restrictions are set to take place on May 1, 2022. However, any preclearance of transactions will take effect on July 1. It will be interesting to see the impact of barring top officials from owning such securities and what this will do for the financial market.

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Updated: 02/21/2022 — 10:00