In response to mounting controversy over the investments of its top officials, the Federal Reserve announced a new set of regulatory measures on Thursday.
In this way, the main officials of the Fed, including both the members of the Federal Open Market Committee (FOMC) and other senior officials, will be prohibited from investing in shares of specific companies. In other words, your investments from now on will have to be limited to diversified assets, such as mutual funds.
They will also not be able to invest in individual bonds or derivative contracts, among other assets. These new rules replace existing ones which, although somewhat restrictive, still allowed members to buy and sell specific shares.
“These strict new rules set the bar very high to assure the public we serve that all of our senior officials maintain a unique focus on the public mission of the Federal Reserve,” Fed Chairman Jerome Powell himself explained in a release.
Under the new rules, officials will have to notify 45 days in advance of the purchase or sale of any security that is still allowed. They will also be required to hold the securities for at least one year and will not be able to buy or sell funds during “high stresses in the financial markets.”
The announcement indicates that regional Fed chairmen (who are not considered government officials as such) will have to disclose their transactions within 30 days, a requirement that already applies to FOMC members and other senior officials. .
The new rules will be formally incorporated “over the months,” the statement said. Current holdings that do not meet the requirements will have to be sold, although a specific timeframe for this was not disclosed.