SEC places most staff on unpaid leave amid government shutdown
What's the story
The US Securities and Exchange Commission (SEC) has begun the process of furloughing workers due to a federal government shutdown. The move comes after Congress failed to extend funding, limiting key oversight functions and stalling initial public offerings (IPOs). The SEC will retain only about 393 employees, or less than 10% of its workforce, for emergency enforcement actions and market surveillance during this period.
Derivatives market oversight
CFTC also working with skeleton staff
The Commodity Futures Trading Commission (CFTC), which regulates derivatives markets, will also be working with a skeleton staff. It intends to continue market oversight and prevent fraud and abuse with just 5.7% of its 543 employees during this shutdown period. The decision is part of a plan published Tuesday evening by the CFTC in light of the ongoing federal government shutdown.
Market volatility
Prolonged shutdown could lead to market volatility
While previous short-lived shutdowns haven't affected markets much, a prolonged one could delay or cancel important economic data releases. These are used by investors to assess macroeconomic trends and could lead to asset price volatility. On Wednesday, Wall Street futures and the dollar stumbled while gold hit a record high amid these uncertainties stemming from the government shutdown.
IPO market revival
Crypto ETFs expected to face delays
The SEC's Division of Trading and Markets will not be able to review pending filings due to the shutdown. This could delay the expected approvals of several crypto exchange-traded fund products in the coming weeks, according to its shutdown plan. Analysts had earlier predicted that ETFs linked with cryptocurrencies Solana and XRP would debut in early October, but now those timelines may change.