US Market Oversight Hampered as government Shutdown Begins
WASHINGTON D.C.- October 1, 2025 - U.S. market regulators began furloughing staff Wednesday as a federal government shutdown commenced following Congress’s failure to agree on funding legislation. The closure is already impacting key oversight functions, halting initial public offerings, and restricting the flow of some market and economic data.
The Securities and Exchange Commission (SEC) is operating with a drastically reduced workforce, retaining approximately 393 employees – just over 90% of its staff has been furloughed – to focus on emergency enforcement actions and market surveillance, according to the agency’s contingency plan. The SEC, which regulates thousands of listed companies, exchanges, broker-dealers, and funds, alerted employees Tuesday evening to prepare for the shutdown, Reuters reported.
The commodity Futures Trading Commission (CFTC), responsible for overseeing derivatives markets, is functioning with only 5.7% of its 543 personnel. these remaining staff will concentrate on market oversight and preventing fraud and abuse, the CFTC stated in a plan released Tuesday.
While previous, short-lived government shutdowns have had limited market impact, a prolonged closure could delay or cancel crucial economic data releases used by investors to gauge macroeconomic trends, potentially triggering asset price volatility. Wednesday saw Wall Street futures and the dollar decline, while gold reached a record high.
The shutdown will allow routine company filings with the SEC to continue, but the agency will be unable to process IPOs, potentially hindering a recent revival in the IPO market. “A shutdown gives investors a reason to think twice on whether to buy into new deals at a time of heightened political uncertainty,” said Samuel Kerr, head of equity capital markets at Mergermarket.”The shutdown has the immediate impact of damaging investor sentiment now and the longer-term effect of clogging the IPO pipe.”
Furthermore, the SEC’s Division of Trading and Markets’ inability to review pending filings will likely delay approvals for numerous cryptocurrency exchange-traded fund (ETF) products anticipated in the coming weeks.Analysts had predicted ETFs linked to cryptocurrencies Solana and XRP could launch in early October.
