Federal Reserve has put a ban on its officials from trading on stocks, bonds, cryptocurrencies and other assets under rules set forth in October 2021. The new regulations include a ban on cryptocurrencies freshly.
According to Federal Open Market Committee (FOMC), most of the restrictions mentioned in the regulations will be effective from May 1. It will cover the FOMC members as well as the regional bank presidents along with other officials including bond desk managers, staff officers and Fed employees. Their spouses and minor children too are banned for the same.
It is learned a further review and analysis will take place soon and additional staff may become subject to either all the rules or part of the same.
The updated rules are mainly focused on supporting public confidence in the integrity and impartiality of the Committee's work. It is reported several senior Fed officials were trading stocks and other assets last year ahead of the adoption of new measures by the central bank.
Ban on cryptocurrencies like bitcoin, ethereum, litecoin and dogecoin was not mentioned in the original announcement of October 2021. Officials holding positions in the crypto coins have a time frame of 12 months to shed prohibited positions. New Fed officials just have six months to do the same. Henceforth, officials need to give a notice of at least 45 days before making any purchase of assets that are permissible.
Apart from cryptocurrencies, bonds and stocks, the ban is extended to forex, derivatives, short positions, sector index funds, commodities, margin debt and agency securities.
Restrictions on members from owning individual stocks may also come into the ban list in the future. The measure is currently being debated by Congress and has not been yet adopted.
The new rules are believed to boost up confidence among the investors and send a clear message of impartiality and integrity from the Committee. More updates in the future will strengthen the focus of work.
Federal Reserve Bank of Dallas President Robert Kaplan is learned to have made millions of dollars trading stocks during the COVID-19 pandemic. It was the time when the central bank was working on the measures.
FOMC is a committee within the Fed system and oversees the open market operations in the United States. It makes decisions on interest rates and simultaneously the growth of the money supply in the country. It is the principal organ of the United States' national monetary policy.