shine trader limited reports:
The Federal Reserve announced on Thursday that it prohibits policymakers and senior officials from holding individual stocks and bonds, and restricts other trading activities, in response to the huge controversy caused by the previous “stock speculation storm.”
The ban applies to senior policymakers of the Federal Reserve, such as members of the Federal Open Market Committee (FOMC) and senior staff. The future investment of these officials will be limited to diversified investment vehicles such as mutual funds.
Under the new rules, Fed officials can no longer hold stocks in specific companies, nor can they invest in individual bonds, holding institutional securities or derivative contracts. The new regulations replace existing regulations, which, despite some restrictions, still allow officials to buy and sell stocks.
Federal Reserve Chairman Jerome Powell (Jerome Powell) said in a statement: “These strict new rules raise the bar to assure the public we serve that all our senior officials are single-mindedly focused on the Federal Reserve’s public mission. .”
Under the new rules, officials must give 45 days’ notice before buying or selling securities that are still allowed. They are also required to hold these securities for at least one year and cannot buy or sell funds during periods of “increasing financial market pressure.”
In addition, the President of the Federal Reserve Bank must disclose transaction information within 30 days, which is an existing requirement of FOMC members and senior staff. The stocks currently held by officials will be divested, but no timetable has been announced. The press release stated that the new rules will be formally implemented within “one month.”
A series of financial disclosures showed that Fed Vice Chairman Richard Clarida, Dallas Fed Chairman Robert Kaplan and former Boston Fed Chairman Eric Rosengren all conducted major financial transactions during the epidemic last year. These transactions (some of which amount to millions of dollars) have aroused the anger of the U.S. Congress and fear that as the Fed begins to take emergency measures to help the U.S. economy get out of the pandemic recession, Fed officials may conduct transactions based on non-public information.
The Fed said earlier that it is working with the Office of the Inspector General (OIG) to review the 2020 transactions of a small number of Fed officials to determine whether these transactions meet ethical standards and do not violate any laws. US Senator Elizabeth Warren also stated in a letter to the chairman of the US Securities and Exchange Commission (SEC) that he requested the SEC to investigate whether the personal investments of three Fed officials violated insider trading rules.
After the scandal of the Fed’s senior officials’ stock speculation was exposed, Powell has instructed staff to review the Fed’s ethical rules on appropriate financial activities. Powell was also exposed himself and thereafter had 60% of assets in US stocks configuration, and holds a similar bond purchases the Fed during the epidemic , but also to sell up to $ 5 million worth of shares in October last year .