Forbes – The impact of the October 1 shutdown of the federal government on hedge funds is now playing out in slow motion. While the SEC remains open due to its ability to self-fund for a few weeks, its sister agency, the CFTC has shut down. These are the agencies that provide oversight to the securities and commodities markets that hedge funds trade in. Additionally, these agencies support the rule-making, registration and examination systems that are backbone to the integrity of the hedge fund industry.
The CFTC closure is particularly unfortunate because the CFTC was just at the critical inflection point of putting in place a large number of the Dodd-Frank mandates, including most importantly, the set up of the swap execution facilities for derivatives trading (SEFs). While the CFTC had granted several short-term deadline exemptions and relief provisions at the end of September, the SEF’s that are being set up at exactly this time will have to do so without the support of the CFTC.