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). [1]
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." [1]
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Both of the reasons mentioned above are "regulatory" trading halts and are implemented on many major stock exchanges (for example, the American Stock Exchange, 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. [1]
The NASDAQ and other exchanges currently use 11 codes to specify in more detail why trading has been halted for a security. [2] The Over The Counter Bulletin Board (OTCBB) currently uses 5 codes. [3]
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. [1]
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.
A trading suspension occurs when the United States Securities and Exchange Commission (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. [4] On its web site, the SEC maintains a list of trading suspensions going back to 1995.
Trading curbs stop trading for an entire exchange when the market has experienced a drop (or several drops) in value.