Trading Halt

Sometimes trading in a security is paused. A trading halt can apply to a single stock or, in extreme cases, to the entire market. During a halt, orders cannot be executed, although they may still be entered or canceled depending on the venue.

Single-stock halts often happen when a company is about to release important news, such as a merger or major regulatory decision, so that all investors can absorb the information at the same time. Exchanges can also halt a stock because of unusual activity, questions about public information, or a failure to meet listing requirements. The SEC can suspend trading for up to ten days.

Volatility-based pauses are also common. Under the US limit up-limit down mechanism, a stock that moves too far too fast outside a set price band is paused briefly. In addition, market-wide circuit breakers stop trading in all stocks when the S&P 500 falls by set percentages in a single day.

Example: a company announces it is being acquired. Its stock is halted for news, and trading resumes an hour later, typically at a very different price.