• Federal Reserve officials and several other groups of employees will not be allowed to trade stocks, bonds and crypto such as Bitcoin starting May 1

• Senior officials will need to give a 45-day notice and receive authorisation before trading any securities.

• The restrictions were announced last October but have just been formally adopted.

The US Federal Reserve has banned members of the Federal Open Market Committee (FOMC), senior staff, and other employees from trading stocks, bonds, and cryptocurrencies.

The move follows an earlier announcement released in October 2021, and which the central bank formally adopted on Friday, February 18, 2022.

The restrictions will take effect on May 1st and will prohibit senior Federal Reserve officials from purchasing individual stocks or sector funds. The ban extends to individual bonds, commodities, agency securities, cryptocurrencies, and foreign currencies, the press release added.

Among other requirements, senior central bank officials will from 1 July, be expected to give 45-day advance notice before they undertake any trades involving securities. Official approval is required before the purchase or sale can proceed. Investments must be kept for at least one year.

Fed officials will not be permitted to make or sell any purchases during “periods heightened financial market stress .”

All officials listed in the notice have 12 months from 1st May “to dispose of all impermissible holdings,” while those to come under the restrictions at a later date will only have six months to dispose of such holdings.

Who else is prohibited?

The restrictions apply to FOMC members and regional Fed Presidents. They also affect FOMC staff officers and managers. A cadre of employees, their spouses, and minor children are also affected by the restrictions.

Other staff members will be added to the list after further review and clarification of the notice.

Why the restrictions?

According to the release, Fed seeks “confidence” among the public about the impartiality of its officials.

The ban is also intended to protect “against even any appearance of conflict of interest,” as many have seen after several high-profile instances of insider trading that involved Fed officials.