A trading halt is when trading in a specific stock or financial instrument is temporarily paused by an exchange. This can happen for various reasons, but the goal is always to promote fairness and protect market stability.
Why does a trading halt happen?
Trading halts are typically triggered by:
- Unexpected news: for example, a company might release important information that could impact its stock price significantly.
- Rapid price movement: if a stock rises or falls too sharply in a short time, exchanges may step in to pause trading.
- Regulatory review: if there are concerns about unusual activity or compliance, authorities may halt trading while they investigate.
What happens during a halt?
You won’t be able to buy or sell the affected asset while it’s halted. However, you can usually still place orders – they’ll just be queued until trading resumes. The halt usually lasts a short time, but it depends on the reason.
Trading halts are there to give the market a moment to catch its breath – and give everyone a fair shot at responding to new developments.