Fed Adopts Rules Banning Its Officials from Trading Stocks, Crypto

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The rules stipulate that Fed officials can’t purchase individual stocks, cryptocurrencies or commodities.

Stung by the questionable trading activity of three former Federal Reserve officials, the Fed’s policymaking Federal Open Market Committee (FOMC) announced Friday that it’s adopting new rules for trading by senior central bank officials.

The fresh regulations were first announced in October. They aim “to support public confidence in the impartiality and integrity of the [Federal Open Market] Committee’s work by guarding against even the appearance of any conflict of interest,” the Fed said in a statement.

“Under the new rules, senior Federal Reserve officials are prohibited from purchasing individual stocks or sector funds; holding investments in individual bonds, agency securities, cryptocurrencies, commodities, or foreign currencies; entering into derivatives contracts; and engaging in short sales or purchasing securities on margin.”

Also, officials will have to give 45 days’ notice for buying and selling securities, obtain prior approval for such transactions, and hold investments for at least one year.

“Purchases and sales also will be prohibited during periods of heightened financial market stress,” the statement said.

“These new rules supplement existing rules that prohibit Federal Reserve officials from holding bank stocks and Treasury securities and from engaging in financial transactions during a blackout period around FOMC meetings.”

Former Boston Fed President Eric Rosengren, former Dallas Fed President Robert Kaplan and former Fed Vice Chair Richard Clarida made questionable trades in 2020, causing a firestorm of criticism for the central bank.

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