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New investment restrictions on Fed policymakers and staff

The Federal Reserve Board has announced a broad set of new rules that will prohibit the purchase of individual securities, restrict active trading, and increase the timeliness of reporting and public disclosure by Federal Reserve policymakers and senior staff.

As a result of the new policies, senior Federal Reserve officials will be limited to purchasing diversified investment vehicles, like mutual funds. The new restrictions will apply to both Reserve Bank and Board policymakers and senior staff and prohibit them from purchasing individual stocks, holding investments in individual bonds, holding investments in agency securities (directly or indirectly), or entering into derivatives. The new rules are expansive and are designed to place the Federal Reserve's investment and trading rules at the forefront among major federal agencies.

To help guard against even the appearance of any conflict of interest in the timing of investment decisions, policymakers and senior staff generally will be required to provide 45 days' advance notice for purchases and sales of securities, obtain prior approval for purchases and sales of securities, and hold investments for at least one year. Further, no purchases or sales will be allowed during periods of heightened financial market stress.

Reserve Bank presidents will now be required to publicly disclose financial transactions within 30 days, as Fed Board members and senior staff currently do.

The Board and the Reserve Banks will incorporate these new restrictions into the appropriate Federal Reserve rules and policies over the coming months.

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