FOMC adopts investment and trading activity rules

Bank Regulatory Federal Issues Federal Reserve FOMC Investment

On February 18, the Federal Reserve Board announced that the Federal Open Market Committee (FOMC) adopted new comprehensive rules for the investment and trading activity of senior officials that were first announced in October 2021. The rules aim to enhance public confidence in the impartiality and integrity of the Committee's work. The new rules prohibit senior Federal Reserve officials from: (i) purchasing individual stocks or sector funds; (ii) holding investments in individual bonds, agency securities, cryptocurrencies, commodities, or foreign currencies; (iii) entering into derivatives contracts; or (iv) engaging in short sales or purchasing securities on margin. The new rules also require senior Federal Reserve officials “to provide 45 days’ non-retractable notice for purchases and sales of securities, obtain prior approval for such transactions, and hold investments for at least one year.” Purchases and sales will be prohibited during periods of heightened financial market stress. The rules become effective on May 1, except that the requirements for advance notice and pre-clearance of transactions will take effect on July 1.