Trading halt
Encyclopedia
A trading halt occurs in the U.S. when a stock exchange
stops trading on a specific security for a certain time period. The halt usually lasts for one hour, but is not limited to that. Trading halts occur during the trading day (intraday), while a trading delay occurs at the beginning of the trading day (delayed opening).
Trading halts usually occur when a publicly-traded company is going to release significant news about itself. The halt in trading for the affected security gives investors
time to review the news and assess its impact. Another situation in which a trading halt might occur is when the exchange is uncertain "whether the security continues to meet the market’s listing standards."
, NASDAQ
, and New York Stock Exchange
). When a United States exchange enacts a regulatory halt for a security, other U.S. exchanges that also trade the security will honor the halt.
The NASDAQ and other exchanges currently use 11 codes to specify in more detail why trading has been halted for a security. The Over The Counter Bulletin Board
(OTCBB) currently uses 5 codes.
A "non-regulatory" trading halt occurs if "significant order imbalance between buyers and sellers in a security" exist. (The NASDAQ stock exchange does not implement non-regulatory trading halts.) Before trading resumes, market specialists must determine an appropriate price range in which the security can trade. Unlike regulatory halts, other U.S. exchanges do not always stop trading a security affected by the non-regulatory halt.
NASDAQ OMX
(owner of the NASDAQ stock market) displays current trading halts for the NASDAQ, New York Stock Exchange, and the American Stock Exchange, along with a rolling 21-day history. The OTCBB maintains its own trading halt list and a rolling 6-month history.
(SEC) stops trading for a specific security because of "serious questions ... about a company’s assets, operations, or other financial information." Note that in this case, it is the SEC — not the exchange — stopping the security from being traded.
On its web site, the SEC maintains a list of trading suspensions going back to 1995.
s stop trading for an entire exchange when the market has experienced a drop (or several drops) in value.
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
stops trading on a specific security for a certain time period. The halt usually lasts for one hour, but is not limited to that. Trading halts occur during the trading day (intraday), while a trading delay occurs at the beginning of the trading day (delayed opening).
Trading halts usually occur when a publicly-traded company is going to release significant news about itself. The halt in trading for the affected security gives investors
Investor
An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc...
time to review the news and assess its impact. Another situation in which a trading halt might occur is when the exchange is uncertain "whether the security continues to meet the market’s listing standards."
Regulatory and non-regulatory trading halts
Both of the reasons mentioned above are "regulatory" trading halts and are implemented on many major stock exchanges (for example, the American Stock ExchangeAmerican Stock Exchange
NYSE Amex Equities, formerly known as the American Stock Exchange is an American stock exchange situated in New York. AMEX was a mutual organization, owned by its members. Until 1953, it was known as the New York Curb Exchange. On January 17, 2008, NYSE Euronext announced it would acquire the...
, NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
, and New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
). When a United States exchange enacts a regulatory halt for a security, other U.S. exchanges that also trade the security will honor the halt.
The NASDAQ and other exchanges currently use 11 codes to specify in more detail why trading has been halted for a security. The Over The Counter Bulletin Board
OTC Bulletin Board
The OTC Bulletin Board or OTCBB is an interdealer electronic quotation system in the United States that displays real-time quotes, last-sale prices, and volume information for many over-the-counter equity securities that are not listed on the NASDAQ stock exchange or a national securities exchange...
(OTCBB) currently uses 5 codes.
A "non-regulatory" trading halt occurs if "significant order imbalance between buyers and sellers in a security" exist. (The NASDAQ stock exchange does not implement non-regulatory trading halts.) Before trading resumes, market specialists must determine an appropriate price range in which the security can trade. Unlike regulatory halts, other U.S. exchanges do not always stop trading a security affected by the non-regulatory halt.
NASDAQ OMX
NASDAQ OMX Group
NASDAQ OMX Group, Inc. is a United States public company that owns and operates the NASDAQ stock market and eight European stock exchanges in Armenia plus the Nordic and Baltic regions under the OMX banner...
(owner of the NASDAQ stock market) displays current trading halts for the NASDAQ, New York Stock Exchange, and the American Stock Exchange, along with a rolling 21-day history. The OTCBB maintains its own trading halt list and a rolling 6-month history.
Trading suspension
A trading suspension occurs when the United States Securities and Exchange CommissionUnited States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
(SEC) stops trading for a specific security because of "serious questions ... about a company’s assets, operations, or other financial information." Note that in this case, it is the SEC — not the exchange — stopping the security from being traded.
On its web site, the SEC maintains a list of trading suspensions going back to 1995.
Trading curb
Trading curbTrading curb
A trading curb, also known as a circuit breaker, is a point at which a stock market will stop trading for a period of time in response to substantial drops in value.-Circuit breakers:...
s stop trading for an entire exchange when the market has experienced a drop (or several drops) in value.