U.S. market regulators began furloughing staff on Wednesday as the federal government shutdown took effect, curtailing key oversight functions, stalling initial public offerings (IPOs), and limiting access to market and economic data.
Under the shutdown, the Securities and Exchange Commission (SEC) will furlough more than 90% of its workforce, retaining roughly 393 employees to handle emergency enforcement actions and market surveillance, according to its contingency plan. The Commodity Futures Trading Commission (CFTC), which oversees derivatives markets, will operate with just 5.7% of its 543 staff to maintain oversight and prevent fraud.
While past short-term shutdowns have had limited market impact, analysts warn that a prolonged closure could delay or cancel critical economic data releases used by investors to assess macroeconomic trends, potentially creating asset price volatility. Wall Street futures and the dollar fell on Wednesday, while gold reached a record high.
Routine SEC company filings will continue, but the agency will be unable to process IPOs, potentially slowing the recent rebound in the IPO market. Samuel Kerr, head of equity capital markets at Mergermarket, said, “A shutdown gives investors a reason to think twice on whether to buy into new deals at a time of heightened political uncertainty. The shutdown has the immediate impact of damaging investor sentiment now and the longer-term effect of clogging the IPO pipe.”
The SEC’s Division of Trading and Markets will also be unable to review pending filings, delaying approvals for several anticipated cryptocurrency exchange-traded funds (ETFs), including products tied to Solana and XRP, originally expected to launch in early October.