On October 1, 2025, the U.S. government entered a shutdown following a lapse in appropriations. As in previous shutdowns, federal agencies including the SEC and the CFTC have published contingency plans outlining how their operations will be affected. While essential services will continue, most agency staff are furloughed, and many regulatory functions are suspended.
This alert summarizes the key impacts of the shutdown for financial services firms, including what activities will continue, what will pause, and what firms should do to remain compliant during this period.
What the Shutdown Means for Financial Services
The SEC and CFTC have both confirmed that the majority of their staff will be furloughed until a new budget is passed. According to the SEC’s Operations Plan, only 393 of its 4,289 employees will remain active during the shutdown. The CFTC’s plan indicates that 31 of its 561 employees funded by annual appropriations will continue working, along with 18 additional staff in offices funded by alternative sources, such as the Whistleblower Office and the Office of Customer Education and Outreach.
While working without pay is prohibited by law, essential services, such as market surveillance and emergency enforcement, will continue. However, most regulatory activities, including registration reviews, examinations, and rulemaking, will be suspended.
Registration and Reporting
Filing systems such as the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR), Investment Adviser Registration Depository (IARD), and Central Registration Depository (CRD) will remain operational and will continue to accept submissions. However, firms should be aware that SEC and CFTC staff will not be available to review or approve new or pending registration statements.
Any applications to register new entities that have not been approved before the shutdown will be suspended until the government reopens. Firms should plan accordingly and communicate any expected delays to stakeholders.
Reports issued by the CFTC including the weekly Swaps Report, Commitments of Traders (COT) report, Cotton-on-Call, and Bank Participation Report are also paused.
Enforcement
Both agencies will maintain a minimal team of staff to process tips, complaints, and referrals. Enforcement actions will proceed only in cases deemed emergent. Routine enforcement matters will be paused until full staffing resumes.
Examinations
SEC Examinations are suspended, except where necessary to support emergency enforcement matters. Importantly, firms currently undergoing an exam must continue to meet deadlines and respond to requests, even though examiners may not reply during the shutdown. We are aware that some firms that received SEC deficiency letters have been advised to respond within 30 days even if the shutdown has not ended and to make a written request if an extension is needed, even though the staff will not reply.
NFA examinations of CFTC registrants and FINRA examinations will continue during the shutdown.
Market Monitoring and Surveillance
The SEC will continue to perform critical market oversight functions, including:
- Market watch activities
- Monitoring broker-dealers reported as being in financial distress
- Oversight of money market funds
- Surveillance of international market developments that may impact U.S. markets
The CFTC will maintain its oversight of derivatives markets to prevent fraud and manipulation. However, most functions within its Divisions of Enforcement, Market Oversight, Clearing and Risk, and Market Participants will be suspended.
Rulemaking and Interpretive Guidance
All SEC rulemaking activities and consideration of applications for interpretive guidance, no-action relief, and exemptive orders are suspended. The CFTC has similarly paused its work on rulemaking and other responsibilities mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Other Government Agencies
The government shutdown also affects agencies beyond the SEC and CFTC, particularly those responsible for producing key economic indicators. The Department of Labor’s Bureau of Labor Statistics (BLS) and the Commerce Department’s Bureau of Economic Analysis (BEA) are not expected to release their regular monthly and quarterly reports on employment, inflation, and GDP during the shutdown.
For investment advisers, the absence of this data may present challenges. These reports often inform portfolio construction, asset allocation decisions, and client communications. Without timely economic data, advisers may need to reassess how they interpret market conditions and adjust their strategies accordingly. While the broader implications for economic growth are complex and politically sensitive, firms should remain focused on managing risk and maintaining transparency with clients.
Client Action Checklist
The duration of this shutdown is uncertain. Past shutdowns have ranged from a single day to more than a month. Regulated firms should prepare as though operations could resume at any time and ensure they remain ready to respond immediately when agencies open.
To help navigate the shutdown, we recommend firms:
- Meet all filing deadlines, even if agency staff are unavailable to respond, or at a minimum, advise the staff in writing of delays.
- Track pending registrations and applications and prepare for delays.
- Document all exam submissions and maintain examiner communication even though examiners will not respond during a shutdown.
- Review investment strategies in light of missing federal economic data.
- Monitor agency updates and ACA alerts.
Risks to Monitor
While trading and investing operations are expected to continue with minimal disruption, firms should remain vigilant. Reduced regulatory oversight for a prolonged period may increase market volatility and delays in registration or guidance could impact business timelines. The absence of federal economic data may also create uncertainty in portfolio management and client reporting.
Looking Ahead
If the shutdown extends, firms should expect:
- A growing backlog of registration reviews, enforcement actions, and examinations.
- Growing concern about the absence of a robust regulatory presence in the markets.
- Increased market uncertainty driven by the impact of the shutdown on the U.S. economy, as well as gaps in federal economic reporting, particularly if the Federal Reserve is faced with trying to manage stagflation without essential reports from the Bureau of Labor Statistics and the Bureau of Economic Analysis.
ACA Can Help
Navigating regulatory uncertainty requires proactive planning. ACA can advise firms on:
- Developing contingency plans to manage regulatory delays.
- Documenting examiner communications during suspended examinations.
- Preparing to proceed with exams as soon as the government resumes.
Contact us to discuss the impact of this shutdown on your firm and how ACA can help you maintain compliance.
Disclaimers and References
This alert is intended for informational purposes only and does not constitute legal or investment advice. ACA will continue to monitor developments and provide updates as appropriate.