February 18, 2022

FOMC formally adopts comprehensive new rules for investment and trading activity

For release at 12:30 p.m. EST

The Federal Open Market Committee on Friday announced that it unanimously formally adopted comprehensive new rules for the investment and trading activity of senior officials. The rules, which were first announced in October 2021, 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.

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. Additionally, senior Federal Reserve officials will be required 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 also will be prohibited during periods of heightened financial market stress. 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.

When the new policy takes effect, Reserve Bank presidents will be required to publicly disclose securities transactions within 30 days, as Board members and senior Board staff currently do. In addition, financial disclosures filed by Reserve Bank presidents will be promptly posted on the website of the relevant Reserve Bank. Financial disclosures filed by Board Members will continue to be available on the website of the Office of Government Ethics.

In addition to Board Members and Reserve Bank presidents, the new rules apply to Reserve Bank first vice presidents, Reserve Bank research directors, FOMC staff officers, the manager and deputy manager of the System Open Market Account, Board division directors who regularly attend Committee meetings, any other individual designated by the Chair, and to the spouses and minor children of these individuals. The Federal Reserve expects that additional staff will become subject to all or parts of these rules after the completion of further review and analysis.

Officials covered by the new rules will have 12 months from the effective date of the rules to dispose of all impermissible holdings, and, going forward, newly covered officials will have 6 months to dispose of all impermissible holdings. The rules will take effect on May 1, 2022, except that the requirements for advance notice and pre-clearance of transactions will take effect on July 1, 2022.

The Committee also extended the financial trading blackout period around regularly scheduled FOMC meetings by one day following each meeting to align it with the Committee's external communication blackout period.

The Federal Reserve Board will also vote on conforming changes to the Federal Reserve Banks' codes of conduct.

A copy of the new rules is attached.

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Last Update: February 18, 2022