The Fed said the new rules would prohibit policymakers and senior employees from buying individual stocks and bonds and restrict active trading. The central bank also promised to increase the frequency of reporting and public disclosure.
The new policy means senior Fed officials will be limited to buying vanilla investment vehicles such as mutual funds.
“These tough new rules raise the bar high to reassure the public that all of our senior executives remain single-mindedly focused on the Federal Reserve’s public mission,” Fed Chairman Jerome Powell said in a statement.
The policy comes as the Fed remains embroiled in a business scandal. Last month, the heads of the Boston and Dallas Federal Reserve banks announced early retirements amid criticism of their trades. Boston Fed Chairman Eric Rosengren cited health concerns.
The Fed said the restrictions would apply to officials of regional Fed banks as well as the Fed’s board of governors. The policy will prohibit these officers from investing in individual bonds, entering into derivatives or holding investments in agency securities.
In an effort to “protect against the appearance of any conflicts of interest at the time of investment decisions,” the Fed said policymakers and senior staff “generally” have 45 days to buy and sell securities. Will be required to provide advance notice and obtain prior approval for purchase and sale of securities. They will also need to hold the investment for at least a year.
“No buying or selling will be permitted during periods of heightened financial market stress,” the Fed said.
Credit : www.cnn.com