The Board Can Further Enhance the Design and Effectiveness of the FOMC's Investment and Trading Rules

Following multiple incidents involving senior Federal Reserve System officials, the Federal Open Market Committee adopted a new personal investment and trading policy that prohibits covered individuals from purchasing individual securities, restricts active trading, and revises public reporting and disclosure requirements. We assessed the design and effectiveness of this policy as well as the Board's and the Federal Reserve Banks' approach to monitoring potential conflicts of interest.

We determined that the new FOMC personal investment and trading policy can be enhanced. Specifically,

• requirements that apply to senior FOMC officials can be extended to additional staff based on the risk presented by their access to confidential FOMC information
• ethics programs can be strengthened to make reviews of financial disclosure reports more uniform and to enforce consequences for policy violations
• the information individuals provide in their financial disclosure reports can be verified for completeness and accuracy

This report contains recommendations.