Nasdaq says the shutdown is paralyzing the IPO market - and the huge bottleneck of firms waiting to go public is getting worse

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Nasdaq says the shutdown is paralyzing the IPO market - and the huge bottleneck of firms waiting to go public is getting worse

donald trump stock market nasdaq

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Trump's shutdown is clogging up the IPO process.

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  • In an interview with Business Insider, the president of the Nasdaq Stock Exchange has warned that the US government's record-breaking shutdown is crippling the market for initial public offerings.
  • Speaking at the World Economic Forum in Davos, Switzerland, Nelson Griggs said that thanks to the shutdown, the SEC is unable to process the paperwork required for companies looking to go public.
  • "We'd like to see a resolution here obviously as quickly as possible because it is impacting, not just to a small degree Nasdaq, but to a large degree the companies that are trying to go public."
  • Follow all of Business Insider's coverage from Davos here.

The President of the Nasdaq Stock Exchange has warned that the US government's record-breaking shutdown is crippling the market for IPOs, and in turn causing a huge backlog of companies waiting to list publicly.

Speaking at the World Economic Forum in Davos, Switzerland, Nelson Griggs told Business Insider that thanks to the shutdown, the Securities and Exchanges Commission can't process the paperwork required for companies looking to go public, meaning no listings are possible.

"We'd like to see a resolution here obviously as quickly as possible because it is impacting, not just to a small degree Nasdaq, but to a large degree the companies that are trying to go public," Griggs, who is president of Nasdaq Stock Exchange, and executive vice president for corporate services, said on the sidelines of the annual conference of the global elite.

Towards the end of 2018, many firms looking to go public delayed their listings thanks to the huge volatility that plagued financial markets, opting instead for IPOs in early 2019 instead. The majority of those listings cannot go ahead, however, thanks to the shutdown.

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"We have over 90 companies that have filed there S1's [the key filing required to list publicly] that had a path," Griggs said.

"If a company has not gone down the path very very far with the SEC there's nothing we can do whatsoever," he added.

Read more: SHUTDOWN DAY 33: Federal courts say they'll be crippled by next week; bills in Congress to reopen the government look dead on arrival

The Wall Street Journal reported earlier this week that some firms are looking to use a little known workaround to list even during the shutdown. According to the Journal, this involves "changing language in an IPO filing to make it automatically effective after 20 days."

Doing so is legal, and the WSJ reports that the SEC actually reminded firms that they can take advantage of the process. Two companies, Gossamer Bio Inc and TCR2 Therapeutics Inc, have explored doing so.

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"If they have gone down the path very very far we think the SEC's done their work and it's really up to us to do ours, there is a unique path to go public but it's it's something that no one's ever done before," Griggs said of the process during his conversation with Business Insider.

Once the government shutdown does end, Griggs said, there is likely to be a substantial backlog of IPOs to clear, a process that will not be immediate.

"It's not just, you know, this opens up and you flip a switch," he said. "There's going to be a very large backlog. You have an impact where companies do their filings and projections based off of a quarterly number ... Those numbers have become stale."

"So what you basically have is the likelihood that there is a fairly significant push back even if the SEC open up tomorrow."

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